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:

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

During the past two weeks, Israel celebrated its 62nd birthday and, almost to the day, Zion Oil & Gas celebrated its 10th birthday.

According to Harvard University Professor of Economic History, David Landes, “In the last 50 years, only one country in the world has moved from being a third world economy to a first world economy…and that is Israel!”

At Zion Oil, we believe that we may be able to help Israel’s economy (soon, we hope) by discovering significant quantities of oil and gas onshore in Israel.

We are not completely alone in our belief that there are significant quantities of oil and gas waiting to be discovered. You can read below the latest estimates of the United States Department of the Interior (Geological Survey Department) and also the thoughts of Hal Lindsey in his recent weekly report.

In any event, our daily efforts continue steadily and with determined focus. So, here is the report of Zion’s work during the past two weeks:

Meetings in Ankara, Turkey

Memorandum of Understanding (MoU) with Aladdin Middle East, Ltd. (AME)

This past week, as you can see in the photographs, I visited AME’s offices in Ankara, Turkey, in order to sign original copies of the MoU and discuss in detail Zion’s plans for future drilling onshore Israel. The press release regarding the MoU was issued on April 19, 2010 and detailed our plans to secure the 2,000 horsepower drilling rig in Israel on a permanent basis (click here to read the press release).

I’m pleased to report that my meetings with AME were both agreeable and productive. We signed the original MoU copies and will move forward just as fast as we can.

Personally, I have found AME’s management, administrative staff, and drilling personnel to be courteous, professional and a pleasure to work with.

The United States Geological Survey (USGS Survey)

On April 8, 2010, the USGS issued a report with the title: “Assessment of Undiscovered Oil and Gas Resources of the Levant Basin Province, Eastern Mediterranean.” You can review the USGS Survey by clicking here.

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. I note that all of Zion’s exploration areas fall within the Levant Basin.

I’ll also note that the USGS Survey cites seven references and three of those references were co-authored by Zion director (and Chairman of Zion’s Technical Committee) Dr. Druckman (who is also Israel’s previous Petroleum Commissioner).

At today’s prices (see www.oil-price.net), the value of the undiscovered oil and gas assessed in the USGS Survey amounts to approximately $650 Billion US Dollars… By any measure, that’s a very large financial treasure waiting to be discovered.

Hal Lindsey Report

On April 23, 2010, Hal Lindsey published his weekly report on the Internet. At approximately 18 minutes into the report he commented on oil and gas in Israel, the USGS Survey, Noble Energy and Zion Oil & Gas. You may be interested to view the report here – we certainly appreciate Hal Lindsey’s support.

With regard to ‘Operations‘, we are now preparing for the next well, as you can read.

Ma’anit-Rehoboth #2 Well

Following completion of production testing operations, this well was temporarily suspended for possible future use as an offset well to the Ma’anit-Joseph #3 (M-J #3) well (see below) which is to be drilled a short distance away. The drilling rig is currently being secured ‘on-site’ and undergoing maintenance, until it is called into service to spud the M-J #3 well in the near future.

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 permitting for the M-J #3 well. This past week we met with Kibbutz Ma’anit in order to discuss terms for drilling the M-J #3 well on their land, not far from the site of the previous well, the Ma’anit-Rehoboth #2 well. I’m pleased to report that our meeting was most amicable. This new well is targeted at the (“deep”) Permian geological layer and we estimate that we will “spud” (i.e. begin drilling) the well in the summer of 2010.

Elijah #3 Well

As previously reported, 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 now decided to acquire some additional field seismic data that will help us to resolve certain questions regarding the geology of the area surrounding the Elijah #3 well. The timing for this work is scheduled to take place in mid-summer 2010.

The Issachar-Zebulun Permit Area

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. The timing for the field work is scheduled to coincide with the seismic field work for the Elijah #3 project area.

2010 Annual Meeting of Stockholders

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 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.

“But who am I, and what is my people, that we should be able to offer so willingly after this sort? For all things come of thee, and of thine own have we given thee.”

1 Chronicles 29:14

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

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

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.

………………………………………………………

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.

Left to Right: Dr. Bariudin, John McKenney, Dr. Druckman and
Israel’s Petroleum Commissioner, Dr. Mimran

On Tuesday, December 15, 2009, I travelled up to Jerusalem with John McKenney, Zion’s Project Manager, to attend a meeting at Israel’s Ministry of National Infrastructures. We met with Israel’s Petroleum and Mining Commissioner, Dr. Ya’akov Mimran and Dr. Victor Bariudin, Israel’s Senior Coordinator of Oil & Gas Production. Also present at the meeting was Zion Board member, Dr. Charlie Druckman (who was Israel’s Petroleum and Mining Commissioner before Dr. Mimran). We discussed Zion’s current operations and our plans for the future.

Meeting at Zion’s Caesarea Office with the team from Baker Hughes and Baker Atlas

On Wednesday, December 16, 2009, a full team from Baker Hughes and Baker Atlas visited our Caesarea office in order to discuss the work in the year ahead.

Of course, the operations continue independent of meetings; here is this week’s operations update.

The Ma’anit-Rehoboth #2 Well

The Ma’anit-Rehoboth Well Site showing the workover rig

Oil samples brought to Zion’s Caesarea office

We drilled the Ma’anit-Rehoboth #2 well to a depth of 17,913 feet (5,460 meters).

As detailed in last week’s update, we used a workover rig for swabbing operations and retrieved a small quantity of crude oil that we believe came from the open hole section below the last casing point at 15,830 feet (4,825 meters).

Of course, as we also noted in last week’s update, at this stage, we are unsure as to whether we have made a discovery of any hydrocarbon reservoir (and even if we have, we know nothing regarding its possible commercial viability). It may be several months before we are able to arrive at any conclusive determinations.

The workover rig allowed us to swab, confirm that the tubing is not plugged (i.e. blocked) and obtain this information in a cost effective manner.

However, as we do not have zonal isolation in the open hole section of the well, we released the workover rig during the past week and are now evaluating the next steps that we can or should take in order to test the zones of interest individually. It is currently anticipated that we will not resume testing procedures on the Ma’anit-Rehoboth #2 well until after March 2010.

Drilling Operations at the Elijah #3 Well

The A.M.E. drilling rig, at the Elijah #3 site

In last week’s update, I mentioned that we had to carry out fishing procedures due to the failure of a drilling bit.

I am happy to report that the fishing was successful. We recovered the broken piece that came off the drilling bit, including a number of ‘chips’ of metal. As our Drilling Manager remarked, “It was a successful ‘fish and chips’ operation.”

During the past week, we continued drilling to the next casing point. We also successfully ran and cemented the 10.75” casing string..

So, as of this morning, the Elijah #3 well has been cased from the surface down to 6,706 feet (2,044 meters) and, as of this afternoon, we are testing the blowout preventer system in preparation to drill deeper (presently in Upper Jurassic carbonates) as planned.

Please note that, due to the holiday period, the next update will be on Friday, January 8, 2010.

(i) We issued almost all of the 3.6 million shares of stock which were subscribed for in our rights offering and returned to subscribers in excess of $19 million in oversubscription money. Our staff worked overtime in order to ensure that this was all carried out in a timely manner. For those who hold their Zion stock certificate(s) personally (and not in a brokerage account) all stock certificates will be issued and mailed before December 18, 2009.

(ii) By mutual agreement, Zion Oil & Gas parted company with Glen Perry and we wish him well and much happiness in the future. I have taken over Glen’s administrative duties and John McKenney is overseeing the operations side of his work. John McKenney is a Petroleum Engineer with nearly 40 years experience in the upstream oil & gas industry – you can read a shortened form of his biography below – he has quickly become integrated as a valued member of the Zion team.

(iii) At the Ma’anit-Rehoboth #2 well site, early in the week, as swabbing got underway, we saw small amounts of crude oil… (I’ve detailed what happened below). After so much effort (and prayer) you can imagine our reaction.

(iv) At the Elijah #3 well site, we continued drilling (at a very acceptable rate) although, late in the week, a drill bit failed and fishing operations became necessary.

(v) We have begun to finalize the location of our next drilling location. Our Exploration Manager, Stephen Pierce, has proposed that we drill a new (vertical) well into the Ma’anit structure, approximately one kilometer from the Ma’anit-Rehoboth #2 well. This time, hopefully, we will be able to reach the Permian geological layer and see what the ‘deep’ contains.

(vi) We have started planning the (March 2010) seismic acquisition (in the field) on our Issachar-Zebulun permit area.

It really was a very busy week. No one promised that the path to success was either smooth or easy, but we are as determined as ever to overcome any and all difficulties.

So, here is this week’s operations update.

The Ma’anit-Rehoboth #2 Well

We drilled the Ma’anit-Rehoboth #2 well to a depth of 17,913 feet (5,460 meters).

As you can see in the photographs above (taken Monday, December 7, 2009) the workover rig is on location and swabbing operations begun.

As swabbing operations commenced, we retrieved a small quantity of crude oil; a sample will be sent for analysis and, in the meantime, completion operations continue.

It is obviously far too early to say any more than ‘we retrieved a small quantity of crude oil’ but we believe that the oil came from the open hole section below the last casing point at 15,830 feet (4,825 meters).

We now look to see how we can stimulate the well to produce more of the oil that we have seen.

You will remember that during the drilling of this well, we reported that we had positive indications that the well contained hydrocarbon bearing zones. We identified seven ‘zones of interest’ and are now testing the bottom three zones in the well. We are not currently isolating and testing those three zones individually, but are preliminarily testing the lower open hole section of the well as one complete unit.

Now that we have come to complete the well, we are seeing small amounts of crude oil, so we will undertake various testing procedures to clarify the recoverable hydrocarbon potential of this well, if any.

Please keep in mind that, at present, all information is based on initial indications only. At this stage, we are unsure as to whether we have made a discovery of any hydrocarbon reservoir (and even if we have, we know nothing regarding its possible commercial viability). But, as a stockholder, you do have a right to know that we now have small amounts of some crude oil and are now further attempting to evaluate the well. It may be several months before we are able to arrive at any conclusive determinations.

Drilling Operations at the Elijah #3 Well

The A.M.E. drilling rig, at the Elijah #3 site

The Elijah #3 well has been cased from the surface down to 3,461 feet (1,055 meters).

This past week, we have been drilling in Upper Jurassic carbonates with a down-hole motor and a tri-cone tungsten carbide insert bit and have been drilling at an acceptable rate of penetration. On Sunday, December 6th, we changed the drilling bit and (for example) on Wednesday, December 9th we drilled approximately 67 meters.

On Thursday, December 10th, we tripped out of the hole due to indications that the down hole motor had failed. When the drill bit cleared the rotary table, we found, instead, that it was the drill bit that had failed. One section of the drill bit had fractured and remained in the hole along with one of the three cones. This is an unusual mode of failure, as it is not related to either excessive rotating hours or severe drilling conditions.

The subsequent initial fishing trip recovered only small pieces of metal, so another trip was needed. This is being made with a different type of fishing tool and, as a contingency, yet another size and configuration fishing tool is being mobilized to the rig. We are optimistic, as it is a vertical hole and wellbore conditions are stable.

As of today, Friday, December 11, 2009, we have drilled to a depth of approximately 6,540 feet (1,994 meters) and, although there have been the problems described above, are optimistic that drilling will resume soon.

John McKenney

John McKenney holding a sample of oil from the Ma’anit-Rehoboth #2 well.

Mr. John McKenney has been retained as Zion’s Project Manager responsible for operations at the Company’s Ma’anit-Rehoboth #2 and Elijah #3 wells.

John McKenney has nearly 40 years experience in the upstream oil & gas industry. He served in the U.S. Navy for 4 years during the Vietnam War era as an Aviation Electronics Technician. After completion of military service, he gained a Bachelor of Science in Electrical Engineering from Memphis State University. In 1971 he joined Schlumberger and worked for three years as an open and cased hole logging and perforating Engineer in Egypt, Norway and the USA. In 1974, while working on the Ekofisk project, he joined Phillips Petroleum as a Drilling Engineer and then Senior Drilling Engineer, in Norway and the USA, for 8 years. In 1981 he was an Area Drilling Engineer with Natomas North America and worked in Oklahoma, U.S.A. In 1983 he joined Arco International and supervised the drilling of oil and gas wells in Dubai, Ecuador, Egypt and Gabon. In addition, he worked in the purchasing department, ultimately serving as Purchasing Manager. For the period 1995 to 1998 he joined Triton Engineering as part of the turnkey engineering group. Because of his international experience, he provided drilling engineering support to the parent company of Triton Engineering (Noble Drilling) on drilling contracts with the Qatar national oil company. He later joined the $4.5 Billion Hibernia project, Offshore Grand Banks, Newfoundland as a Drilling Supervisor during final rig acceptance and the startup drilling phase. From 1998 to the present, he has been an independent consultant to a variety of companies, including Arco, Kerr McGee, Murphy Oil, Newfield, Ocean Energy and Shell Oil. He is a member of the Society of Petroleum Engineers.

We welcome John and are sure that his extensive oil and gas experience will be a very valuable asset to Zion.

“In your good pleasure, make Zion prosper…”
Psalm 51:18

Thank you for your support of Zion,

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.

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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 or 1-888-891-9466; email:

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We drilled the Ma’anit-Rehoboth #2 well to a depth of 17,913 feet (5,460 meters).

As you can see in the photographs above (taken yesterday, Thursday, December 3, 2009) the workover rig is on location and adjacent to the well head. When I visited the Ma’anit site to take the photographs shown above, I found Aladdin Middle East’s Drilling Manager, Rasim Yoruk, taking his own photographs. He feels a great connection to the site, as it is the first well he has drilled in Israel and he wants to keep a complete personal record of the operations at the site. Such is the deep personal connection that we all feel about our work.

As previously noted, the completion procedures have been agreed and the workover rig contract signed. Starting next week, we intend to begin swabbing and completion testing operations and are looking forward to getting back to work at the Ma’anit-Rehoboth #2 well site.

Drilling Operations at the Elijah #3 Well

The A.M.E. drilling rig, at dusk, at the Elijah #3 site

The Elijah #3 well has been cased from the surface down to 3,461 feet (1,055 meters).

For approximately ten days, from November 19 to 29, we were drilling very hard formation (Lower Cretaceous Tayasir Volcanics) with a PDC bit. The progress was slow and the drilling required much care and attention.

However, we managed to penetrate the volcanics and, ever since, we have been drilling in Upper Jurassic carbonates with a down-hole motor and a tri-cone tungsten carbide insert bit.

Even though the hard volcanic rock was fully expected, the drilling crew certainly prefers drilling at a rate of penetration of 50 meters per day rather than 5 meters per day.

As of today, Friday, December 4, 2009, we have drilled to a depth of approximately 5,740 feet (1,750 meters) and are very satisfied with the drilling progress to date.

This past week, on Thursday, we welcomed Petroleum Engineer John McKenney to Israel. He has arrived to review the completion procedures planned for the Ma’anit-Rehoboth #2 well. John has nearly 40 years experience in Oil & Gas. He has worked for many well-known petroleum companies, including Arco International, Phillips Petroleum, Schlumberger, Tesco Drilling and Triton Engineering. He has also consulted for many other companies, including Murphy Oil, Ocean Energy and Shell Oil.

We drilled the Ma’anit-Rehoboth #2 well to a depth of 17,913 feet (5,460 meters) and soon intend to carry out completion operations on the seven zones that warrant completion testing.

Four of the zones are in the upper (Triassic) part of the hole (and were seen in the Ma’anit #1 well) and three of the zones are in the deeper hole (drilled in the Ma’anit-Rehoboth #2 well).

Operations at the Elijah #3

Drilling Operations on the Elijah #3 Well

Last week I noted that we had cased the well from the surface down to 3,461 feet (1,055 meters), connected the BOP (Blow Out Preventer) and continued drilling.

This past week, drilling progress has been excellent – on three separate days, we drilled over 100 meters per day, exceeding our expectations.

Since Thursday, November 19 we have been drilling very hard formation (Lower Cretaceous Tayasir Volcanics) with a PDC bit (averaging 5 meters per hour penetration).

Very soon, we expect to be drilling in Upper Jurassic carbonates.

As of today, Friday, November 20, 2009, we have drilled to a depth of approximately 4,840 feet (1,475 meters) and are ‘ahead of schedule’.