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What is Zion?

Zion Oil & Gas, Inc. is a Delaware corporation formed in 2000. We explore for oil and gas in Israel. Our principal assets are petroleum rights issued by the Ministry of National Infrastructures of the State of Israel, specifically two exploration licenses currently covering approximately 162,000 acres in northern Israel.

What is the history behind the formation of Zion Oil and Gas, Inc.?

In 1983, during a visit to Israel, John M. Brown (our Founder and Chairman) became inspired and dedicated to finding oil and gas in Israel, and he started the process that led to the Joseph Project. During the next sixteen years he made several trips each year to Israel, hired oil and gas consultants in Israel and Texas, met with Israeli government officials, made direct investments with local exploration companies, and assisted Israeli exploration companies in raising money for oil and gas exploration in Israel. This activity led Mr. Brown to form Zion Oil & Gas, Inc. in April 2000 in order to receive the award of a small onshore petroleum license from the Israeli government.

What are the terms of the Joseph License?

The License is a petroleum right granted by the State of Israel which allows the oil and gas operator to drill on the territory of the License. Zion's Joseph License covers approximately 83,000 acres. It was granted on October 11, 2007 and has an initial term of 3 years, extendable for up to 7 years.  The License is convertible into a production lease if commercial quantities of oil or gas are found.

What are the terms of the Asher-Menashe License?

The License is a petroleum right granted by the State of Israel which allows the oil and gas operator to drill on the territory of the License. Zion's Asher-Menashe License covers approximately 81,000 acres. It was granted on June 10, 2007 and has an initial term of 3 years, extendable for up to 7 years.  The License is convertible into a production lease if commercial quantities of oil or gas are found.

What is 'wildcat drilling'?

Wildcat drilling refers to exploratory drilling in areas where there are very few wells already drilled to the same depth a company might be targeting.

Who did all the research on location, exploration, etc.?

The primary technical (geo-scientific) research was organized by Dr. Eliezer Kashai, Mr. Glen Perry and Mr. Stephen Pierce together with specialized consultant geologists, geophysicists and engineers in Israel, Texas and Canada.

What sort of measures will be taken to secure and protect the drilling site?

The locations will be fenced and access will only be possible through a guarded gate on a limited-access road. There will be infrared sensors located outside the fence at key points and the sites are close to active Israeli military installations.

What rig will be used for drilling?

To do a first-rate job, you need the right tools. We are currently sourcing a suitable Drilling Rig, at a competitive cost, that can cope with a hole 18,000 feet deep. To date, there isn't such a Rig in Israel, so the proper rig must be imported. If you happen to know someone in the oil business and they have a decent rig available, let them contact us. It wouldn't be the first time we were aided by a lucky coincidence (or perhaps, more accurately help-from-above). We have on our staff a young Geologist whose mother met our Exploration Manager at an airport.

What were the results of Zion's earlier drilling?

Zion drilled one exploratory well, the Ma'anit #1, to a depth of 15,482 feet, to the Triassic formation, with encouraging, but inconclusive results. However, notwithstanding these results, due to the mechanical condition of the well-bore, we determined that the well was incapable of producing oil or gas in commercial quantities.  As a result, in June 2007 we abandoned the well and, applying generally accepted accounting principles, we recorded, as of June 30, 2007, an impairment charge of $9,494 thousand to our unproved oil and gas properties. We are engaged in discussions, with two separate contractors, regarding a rig. We plan to be in a position to sign a rig contract in March 2008 and to begin drilling the next well, the Ma'anit-Rehoboth #2, in late June 2008.

What is 'casing'?

Casing is the pipe installed into the hole drilled in the ground that keeps the sides from falling in.

What is the Triassic Age?

The Triassic Age is the geologic time between 250 million and 205 million years ago when most of the plant and vegetable life on Earth was in simple form and just before the Jurassic Age, when dinosaurs roamed the Earth.

What is the Permian Age?

The Permian Age is the uppermost (shallowest) formation of the Paleozoic age – the geologic time between 570 million and 250 million years ago.  The Permian Age (290 million to 250 million years ago) is one of the most prolific oil and gas producing horizons around the world.

What is the 'full cost' method of accounting?

The 'full cost' method of accounting concerns the accounting treatment of oil and gas drilling expenditures in financial statements. All exploration costs and drilling costs for a company's activities within an accounting region (sometimes a country or a larger area, but frequently smaller geographic areas) are capitalized as assets, subject to being reduced when a calculated accounting value of the oil and gas reserves in the region falls below the accumulated cost.

Why hasn't there already been a major discovery of oil in Northern Israel

Exploration for oil in the deep formations of Northern Israel (i.e. 13,500 feet +), is in its infancy. Only one deep well has been drilled for every 350,000 acres of land and of the nine wells drilled, only six have been true exploration wells. Two of the six wells gave very strong indications of the presence of commercial hydrocarbons, before being abandoned for mechanical reasons; three became the basis for Givot Olam's purported new field discovery. The sixth was Zion's Ma'anit #1 well, the results of which indicate what appears to be a discovery of both oil and gas in a number of different zones between 12,500 and 14,600 feet deep. No well has yet been drilled to the Permian formation in Northern Israel. It should be noted that the Permian formation is a prolific hydrocarbon producing formation throughout the world.

Who set the compensation level of the management team?

The salaries for the senior executives were established by Zion's Board of directors after a full review by independent economic consultants, Thomas Roney LLC. The individual experience of each executive was taken into account, as was the expected value of their service to the company. The salaries are in line with salaries paid to senior executives of small and mid-size U.S. and Israeli public oil and gas companies with international operations.

Notice:

This web site and the information contained herein do not constitute an offer or a solicitation of an offer for the purchase or sale of any securities. Our securities can only be offered pursuant to a disclosure document or prospectus in those jurisdictions and to those persons where and to whom they may be lawfully offered. The information in this website includes certain forward-looking statements as defined in the "Safe Harbor" provision of the Private Securities Litigation Reform Act of 1995. These statements are based upon assumptions that are subject to significant risks and uncertainties. Although we believe that the expectations reflected in forward looking statements are reasonable, we can give no assurance that the expectations of any of our forward-looking statements will prove to be correct.
 

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