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

I am happy to announce some excellent news. This past week, Zion Oil & Gas and Aladdin Middle East Ltd (AME) signed a Memorandum of Understanding (MoU) that I believe will not only be good for both Zion Oil and AME, but also for the State of Israel.

The MoU outlines our plan to establish a subsidiary, tentatively named “Zion Drilling, Inc”, for the purpose of purchasing and operating AME’s 2,000 horsepower drilling rig (currently located at Zion’s Ma’anit-Rehoboth #2 wellsite, in Israel).

Zion Drilling will purchase AME’s drilling rig for an initial payment of US$ 7 million and a series of US$ 1 million additional payments that are anticipated to coincide with our drilling seven additional wells in Israel over the next few years. As the funds for the purchase of the rig are to be provided by Zion Oil & Gas, our plans are subject to a number of events, including due diligence, the raising of additional capital and the establishment of Zion Drilling.

Towards that, I am pleased to tell you that, today, our US$ 50 million Shelf Offering S-3 Registration Statement was declared effective by the Securities and Exchange Commission. So, through the S-3, we now have the possibility of raising the additional funds required to implement our plans.

The MoU provides that Zion Drilling, Inc. will be 51% owned by Zion Oil & Gas and 49% owned by AME. However, AME will be responsible for the daily operation of the rig.

Our goal in establishing Zion Drilling, Inc. is to continue to drill wells in Israel without dependence on any outside third party. By implementing this plan, we will secure control of a drilling rig for our planned future operations and, as a consequence, raise our exploration business to a completely new level.

With regard to the Ma’anit-Rehoboth #2 well, you can read below the results of the completion work. We plan to temporarily suspend work on this well although we may return to the well at some later stage. Although the results of the completion work are not what we had hoped for, as we are not able to announce a commercial discovery, we believe that we have laid an excellent foundation for our next well, (named by us) the Ma’anit-Joseph #3 well.

We are currently in the process of obtaining the required permits for the Ma’anit-Joseph #3 well, targeted to reach the Permian geological formation, lying deep beneath the surface. (Deut. 33:13-16)

To date, we have not managed to reach the Permian geological layer, even though it has been one of our main goals from the earliest days of the project. But we are as determined as ever to reach that goal, hopefully, in our next well. (Jer. 29:11)

To quote Chuck Davidson, CEO of Noble Energy, the Texas Company that found the Tamar discovery (currently valued at > US$ 15 Billion) offshore Israel: ‘There is no such thing as a sure thing in the energy exploration business‘.

Although this was the case during the Ma’anit-Rehoboth #2 well completion, we are firmly resolved to use all the information and experience that we gained and drill again into the Ma’anit structure. (Psalm 135:6)

There are a number of reasons why we are so very optimistic regarding the possibility of finding oil & gas onshore in Israel:

(i) During operations, we recovered some crude oil from the Ma’anit-Rehoboth #2 well and we also noted (much more than expected amounts of) natural gas during the drilling phase.

(ii) Last week, the US Geological Survey (USGS) issued a report estimating that there are 1.7 Billion barrels of recoverable oil and 122 trillion cubic feet of natural gas in the Levant Basin Province. The USGS defines the Levant Basin Province as an 83,000 square kilometer area of the Eastern Mediterranean… a large proportion of which is in Israel’s economic zone (both offshore and onshore Israel). You can review the map and read the full report here.

(iii) This week, representatives of Russian energy giant GAZPROM met with Dr. Mimran, Israel’s National Infrastructure Ministry’s petroleum commissioner, to discuss the possible involvement of Gazprom with Israel’s offshore natural gas fields. The press also reported that: ‘a number of other Russian energy giants are showing interest in the Israeli energy and infrastructure sector.’

(iv) Within the past two weeks, ‘Globes‘ (one of Israel’s leading business publications) published an interview with Fred Zeidman, who has been Chairman of the Board or a director of various Texas based oil & gas drilling / exploration / refining companies. In 2002, President Bush appointed him ‘Chairman of the US Holocaust Memorial Council’.

Fred Zeidman made a number of comments regarding the (very bright) future for oil exploration in Israel, including:

1. The prospects in Israel are ‘brilliant‘.

2. The (Tamar etc.) offshore findings were amazing and it is hard to believe that there are no hydrocarbons onshore.

3. It could be that the onshore deposits will be found ‘much deeper’. (This comment was no surprise to us, of course.)

4. Royalties in Israel of 12.5% are reasonable.

His advice to investors is that investment in oil and gas can be wonderful, but you need ‘patience‘. However, the reward, once successful, is enormous.

We are certainly unhappy that we were not able to declare a commercial discovery as a result of the recent completion operations. But our team remain convinced that our license areas and our permit area will ultimately deliver to us their deeply hidden treasure… in G-d’s good time.

We have both the patience and the firm resolve… and now, we expect to soon have the right tool to finish the job – a 2,000 Horsepower drilling rig in Israel on a permanent basis.
………………………………………………………

The Drilling Rig on April 15, 2010

Here is this week’s operations update:

The Ma’anit-Rehoboth #2 Well

As of the last report, we had completed the production testing of our first (of several) ‘zones of interest’ without detecting any clear evidence of hydrocarbons. Following this first test, we conducted two additional tests, one in the open hole section of the well and one in the shallower, cased hole section of the well.

The open hole test was conducted first and was performed in the deepest geologic zone of interest. Following the conclusion of this test, we moved uphole and performed a third test on a separate interval, this time in a cased hole section of the well. In each case, the test procedure consisted of two separate flow and shut-in periods in which the geologic interval was evaluated for productivity and reservoir pressure. We again used Schlumberger Oilfield Services equipment and personnel for this testing work.

Currently, we are performing a ‘swabbing’ operation on this latest test interval as a final means to gauge hydrocarbon potential. Swabbing is an operation by which the heavier fluid column from the wellbore is manually withdrawn from the well. This has the effect of lowering the hydrostatic pressure in the well and allowing potentially lighter fluid (hydrocarbons) from the rock to be produced through natural flow.

While we continue to evaluate the potential from the last production test interval, indications for this and the previous test interval suggest that commercial quantities of hydrocarbons are not present.

In light of this apparent outcome from what was considered to be the zones of greatest potential, we have decided to forego further production testing and have begun plans to temporarily suspend this well. It is our expectation that this well may have further utility as a potential offset well to the next well drilled which will target a completely different geologic formation in Permian aged rocks. Preliminary planning of this next well is underway.

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.

We have now decided to acquire some additional field seismic data (prior to acquiring seismic for Zion’s Issachar-Zebulun Permit area) 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

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. The timing for the field work is scheduled to immediately follow completion of the seismic work planned for the Elijah #3 project area.

Zion Board Appointment

On April 12, 2010 we announced that William L. Ottaviani was appointed to our Board of directors. Bill has been serving as Zion’s President and Chief Operating Officer since January 31, 2010 and will continue to serve in these positions. Bill is a petroleum engineer by training and his 25+ years at Chevron certainly add tremendous oil & gas experience to our Board. You can read the press release here.

“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 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:

My last update to you was on March 19, 2010. During the past two weeks, we have continued our completion work on the Ma’anit-Rehoboth #2 well.

On Wednesday, March 24, 2010, we received visitors, Mr. Jonathan Friedman (Senior Adviser to Israel’s Minister of National Infrastructures) and Dr. Victor Bariudin (Israel’s Senior Coordinator of Oil & Gas Production at Israel’s Ministry of National Infrastructures) to the Ma’anit wellsite. You can see photographs of their visit below. Their visit lasted almost two hours, during which time, they toured the site and reviewed the operations.

They were interested in the various visiting consultants and experts that we have brought to our drill sites. I commented that, whatever we do at Zion, we try and use the best techniques available. For that reason, we brought in oil & gas industry heavyweight companies, such as Schlumberger, Baker Hughes and Weatherford.

Even though Zion Oil & Gas, Inc. has a current market capitalization of only approximately US$ 100 million, the combined market capitalization of the three companies mentioned above is approximately US$ 100 billion. So, if we need specific expertise, they can readily supply it.

………………………………………………………

Here is this week’s operations update

Left to Right: Jonathan Friedman, Dr. Victor Bariudin, Rasim Yoruk (Drilling Manager)

On the Floor of the Rig

Schlumberger’s Neil Galloway

Explaining some of the completion testing procedure

Inspecting pipe in front of the Rig

The Ma’anit-Rehoboth #2 Wellsite on Wednesday March 24, 2010

The Ma’anit-Rehoboth #2 Well

In the previous report, I noted that our first production test (of several tests) planned for the Ma’anit-Rehoboth #2 well would be underway by the time the report was published. True to this plan, we did carry out this first test over an approximate two day period. The test interval was a 20 meter zone selected by our geologists as one of several that were deemed to be potentially hydrocarbon bearing.
This first test consisted of three separate flow periods and two separate shut-in periods. Reservoir pressure ‘draw down’ and fluid/gas flow rates are monitored during the flow periods and reservoir pressure ‘build up’ is measured during the shut-in periods. The flow periods are used to determine a well’s instantaneous flow rates whereas the pressure data is used, in part, to assess long-term productivity and reservoir size. We are using Schlumberger Oilfield Services equipment and personnel during our testing operations to ensure high quality and reliability in the test results.
Operationally, the first test was executed very well although the results were disappointing in that no clear evidence of hydrocarbons was detected. We did, however, gain some especially useful information about reservoir pressures that will help us fine-tune the test design for all subsequent tests in this well.
Currently, we are preparing the well for the second production test in a deeper interval. Traditionally, production tests are started in the deepest part of the well with ensuing tests done successively up-hole. Given the mechanical configuration of the well relative to the target test intervals, we needed to somewhat modify this traditional approach and start our testing in one of the middle target intervals.
Prior to initiating our second production test, we recently installed and cemented in place an inner casing “liner” through most of the well’s open hole section. The second interval to be tested, the deepest of all intervals to be tested, will then be that portion of the well that remains as an open hole. For this test, which we anticipate will begin this weekend, the perforating process will not be necessary since there is no casing and cement sheath separating the wellbore from the reservoir rock. All subsequent tests will be done through casing where the perforating process will again be employed.
So while the first test results were less than we had hoped, several additional targets remain in this well. We have gained much momentum since starting this operation and have already gleaned some useful pressure data from the reservoir rocks. We remain hopeful and will continue to use every tool in our testing arsenal in our ongoing hunt for the elusive hydrocarbons that potentially lurk deep within our license areas.

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 and are looking into the option of acquiring additional field seismic data (at the same time that we acquire the seismic for Zion’s Issachar-Zebulun Permit area) that will help us to resolve certain questions regarding the geology of the area surrounding the Elijah #3 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.

The timing for the field work is scheduled to take place 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:

My last update to you was on March 5, 2010. During the past two weeks, we have continued our completion work on the Ma’anit-Rehoboth #2 well. As you can read below, this includes setting packers in the wellbore and perforating the formation by lowering explosives into the well:

On March 16, 2010, Zion’s financials for the 2009 calendar year were filed with the SEC. If you want to review them, they are available on our website; please click here.

NRB Conference – March 2010

During the past two weeks, a team from Zion attended the National Religious Broadcasters (NRB) Conference in Nashville, Tennessee. The NRB is a non-partisan, international association of Christian communicators whose member organizations represent millions of listeners, viewers and readers. Those attending showed much interest in Zion Oil & Gas and Zion’s Founder and Chairman, John Brown, gave a number of media interviews at the Conference.

NRB Conference – March 2010

Also visiting the NRB conference was Tom Boulting of Charter Films Ltd. Tom is planning to film a documentary about John Brown and Zion Oil & Gas, Inc. with the title ‘49:1 The Zion Story’ He has already established a website for the project at www.zionthemovie.com, including a trailer that you may be interested to watch.

Last week, the Jerusalem Post reported that the Founder and former Chairman of Markstone Capital Group, one of the largest private equity firms investing in Israel, visited Israel and attended the Economic Energy Conference in Tel Aviv. The report notes that, at the conference, he expressed much interest in the Israeli energy sector, which he believes will become significant for the economy and has the potential to lead Israel toward energy independence.

It is clear the Israeli energy sector continues to attract a very high level of interest.

………………………………………………………

Here is this week’s operations update:

The Ma’anit-Rehoboth #2 Wellsite on Thursday, March 18, 2010

The Ma’anit-Rehoboth #2 Well

Since the previous report, we have been working towards the first production test of this well. We have “conditioned” the hole with clean, filtered fluid (a potassium chloride solution that is compatible with the reservoir rock), successfully perforated the first test interval of approximately 20 meters (see the sample illustrations above), acidized the interval, rigged up Schlumberger Oilfield Services Company, and ran in the hole with their production testing tools. By the time this report is published, the first production test should be underway.

During the acidizing operations, we used a 15% hydrochloric acid solution designed to dissolve any rock debris that may have collected in the newly formed perforation channels and to help clean out the near wellbore rock from any residual drilling mud.

The acid solution contains various additives that serve different roles as part of the overall acid “recipe”: a de-emulsifier that ensures fluid stability; a surfactant (wetting agent) that improves fluid flow by reducing friction; a corrosion inhibitor that protects the pipe from the corrosive effects of the acid; and a solvent which helps to clear any plugging caused by hydrocarbons in the rock pore throats.

Surface pressures observed during the acidizing operation suggest that the job successfully achieved its objectives and that we are now ready to production test the flow potential of the first interval.

To begin the production test, we first create a pressure differential in the wellbore. We do this by estimating the pressure in the rock formation of the test interval and then reduce the hydrostatic pressure in the production pipe (run in the wellbore to near the test interval) to a much lower pressure.

This is done by evacuating the fluid column in the production pipe using nitrogen gas – which is possible since the production pipe can be physically isolated from the wellbore. When we are ready to begin the test, we open the production pipe to the test interval and the large pressure imbalance creates the energy for any fluids and gases in the rock to flow to the wellbore and, ideally, to the surface.

We have measuring devices in the well and at the surface, in order to obtain a very accurate reading on pressures and flow rates that will ultimately be used to estimate the amount of producible hydrocarbons within the reservoir rock, if any.

Following this initial test, we will move down hole, where we will test an interval in what is now the ‘open hole’ section of the well. The timing for this next test will depend largely on the outcome of the first test.

Many different factors have to be taken into account when determining how long to production test an interval in an exploration well. A test can run from a few hours to several days and shorter tests don’t necessarily mean bad news just as longer tests don’t necessarily mean good news. We have done what is required to ensure a ‘good’ test… now it is up to the well!

So, at this critical point in our exploration effort, as the Aladdin Middle East, Baker Hughes and Schlumberger specialist teams move forward with their work, let’s all pray for them to reach success… (Deuteronomy 4:7).

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

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.

The timing for the field work is scheduled to take place 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:
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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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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.

Well, for this week’s update, there is ‘news‘… some good and some less so.

But, as Winston Churchill wrote, “Attitude is a little thing that makes a big difference“, so we are moving forward without becoming disheartened by the past week’s (hopefully temporary) setback.

At Zion, we are convinced that we will ultimately surmount all problems, because we are applying a solid professional approach to the job and because we have deep and enduring faith in our work.

Jeremiah (32:17) understood much when he said: “Lord G-d… you have made the heaven and the earth by your great power and stretched out arm, and there is nothing too hard for you.”

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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 were still in the Asher Volcanic Complex.

Very shortly after the update was released, it became apparent that the drill string became stuck in the hole.

Although the well was cased from the surface down to 6,706 feet (2,044 meters), it appears that some of the formation of the uncased hole had ‘crumbled’ into the hole and caused the drill string to become stuck.

This sort of problem with volcanics is well known and we had previously taken steps to prevent such an occurrence (such as increasing the weight and the viscosity of the drilling mud).

However, the prevention could never be 100% guaranteed and, unlucky for us, the event actually happened.

In order to free the stuck drill string, we tried a number of different techniques that are, in such a situation, ‘best practice’ oil and gas procedures.

These had little effect, so we implemented a ‘fishing’ procedure with specially constructed tools suited to our specific requirements. In the oilfield, ‘fishing’ is the term used to describe the process by which equipment stuck in the well is retrieved. It is part ‘art’ and part ‘science’ and requires both skill and patience… and sometimes a little luck… to achieve success.

For example, we tried ‘jarring’ – jolting the pipe in the well, by imparting sharp jolts to the pipe. However, this procedure did not free the stuck pipe.

Having determined where the pipe was stuck, we then performed a ‘back off’ operation by unscrewing the stuck pipe with a ‘string shot’ (an explosive cord).

As I write this update, we have achieved initial success with the ‘back off’ operation, are rigging up to run ‘wash pipe’ and will attempt to ‘wash over’ the remaining fish in the hole.

‘Wash pipe’ is large diameter pipe with a cutting edge that can be used to wash over the fish. Drilling mud can then be pumped though the washpipe to clear debris from around the fish to prepare it for a fishing tool that can then retrieve the fish from the hole.

We remain ‘cautiously optimistic’ that we will soon get past the current obstacles and can then resume drilling towards our target depths.

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.

The analysis of that oil is expected early next week and should provide us with insight as to the quality (but not the quantity) of the oil retrieved. It should also help us to understand the geological source of the oil and this, in turn can help us to evaluate the recommendations by our engineering staff regarding further testing and completion procedures.

Since we completed drilling the well, we periodically open a surface valve to release pressure that has been built up in the well. This past week one of our staff opened a surface valve and found that there was a smell of oil and a thin layer of oily matter floating on top of the white foam that came out under pressure.

Our site geologist ran some tests on samples that were taken from the well and found that the samples ‘fluoresced’ – that is, they shone a faint green color under ultra violet light. This is an indicator that hydrocarbons were present in the sample. Our site geologist preliminarily determined that the sample may be a hydrocarbon condensate and sent it for chemical analysis.

At this stage, 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. It may be several months before we are able to arrive at any conclusive determinations. However, what happened this week certainly gives us cause for optimism.

The Issachar-Zebulun Permit Area

No additional news to report this week.

We have been reprocessing all of the existing seismic and are planning to acquire, in March 2010, approximately 30 kilometers of field seismic, in the permit area.

………………………………….

You may be interested to know that, during the week, the business press in Israel has been full of oil and gas related articles. It certainly is a hot topic in Israel at present.

Finally, early this past week I met with a representative of Aladdin Middle East Ltd and continued discussions regarding the drilling of additional wells for us, in order to progress and implement our multi-well program. In early February, some senior Aladdin Middle East Ltd executives plan to visit Israel. I mention this because there has been some recent publicity regarding the poor diplomatic relations between Turkey and Israel. In contrast, I would describe the relations between Zion Oil and Aladdin Middle East Ltd as ‘excellent’.

“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 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
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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: home: 1-888-891-9466
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The general feeling was that if there is nothing new to report then we should simply state that fact. There will be weeks with much to report and there will be weeks with little to nothing new to report.

Turning to the Book of Ecclesiastes (1:9-10), there is the well known comment:

What has been will be again, what has been done will be done again; there is nothing new under the sun.

Is there anything of which one can say, “Look! This is something new”? It was here already, long ago; it was here before our time.

So, I am not going to continually repeat information that has already been sent to you. Where there is ‘no news to report this week’, I will write just that. But you can be certain that we are doing our best to move Zion’s exploration program forward… every day of every week.

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This past week, Zion’s Founder and Chairman, John Brown, visited Israel together with Bill Ottaviani, a Petroleum Engineer who spent 25 years (1982 to 2007) working for Chevron Corporation in various countries and then two years (2007-2009) as Chief Operating Officer of Rex Energy, helping to build up Rex Energy in the USA. John Brown invited Bill Ottaviani to visit Israel as a prospective candidate for Zion’s Board and to review our operations and help advise us regarding some of the recommendations currently under technical evaluation.

Also, this week, we were visited by a team from ‘Halman-Aldubi Group’ one of Israel’s leading institutional Investment Management groups. Halman-Aldubi is the only company in Israel that deals with the management of provident funds on behalf of the public and is completely independent.

There was some Israeli Oil & Gas news released in Israel, this week. On Wednesday, January 13, 2010, the Jerusalem Post noted that Prime Minister Binyamin Netanyahu has ordered work to begin, this month, on a natural gas pipeline that will run from Dor Beach, south of Haifa, up to the oil refineries in Haifa. The significance of the Israeli government continuing to build the onshore natural gas pipeline infrastructure is that, in the event that we are successful in finding and producing commercial quantities of natural gas, the supply and distribution of that natural gas should be possible through the onshore pipeline system.

……………………………………….

Here is this week’s operations update.

Drilling Operations at the Elijah #3 Well

The Elijah #3 site
L to R: Bill Ottaviani, Richard Rinberg (Zion’s CEO), John Brown (Zion’s Founder and Chairman), Eyal Shuker (Investment Manager at Halman-Aldubi), Sandra Green (Zion’s CFO) and two analysts from Halman-Aldubi

The Elijah #3 well has been cased from the surface down to 6,706 feet (2,044 meters).

For the period from ‘spudding’ the well (that is ‘beginning drilling operations’) to December 31, 2009, we drilled to a depth of approximately 9,186 feet (2,800 meters), at an average rate of penetration of approximately 131 feet (40 meters) per day.

As of this morning, the Elijah #3 well has been drilled to a depth of approximately 10,938 feet (3,334 meters).

Both last week and this week, we have been drilling in the Asher Volcanic Complex, composed of tuffs, weathered basalts, non-weathered basalts, red shales and red and tan mudstones.

The Ma’anit-Rehoboth #2 Well

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

No additional news to report this week.

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. We are awaiting analysis of that oil and are evaluating recommendations by our engineering staff regarding further testing and possible completion procedures.

The Issachar-Zebulun Permit Area

No additional news to report this week.

We have been reprocessing all of the existing seismic and are planning to acquire, in March 2010, approximately 30 kilometers of field seismic, in the permit area.

………………………………….

Finally, I’ll note that we have begun preliminary discussions with Aladdin Middle East Ltd regarding the drilling of an additional well, in order to progress and implement our multi-well program.

“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 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.

Quick Links…

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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; email:

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May 2010 bring you health, happiness and success.

All of us share the same deep desire to achieve success with our goal to find oil and gas onshore Israel.

In my home, hangs the above portrait of Theodor Herzl – the Founder of the modern State of Israel. On the metal frame is engraved, in Hebrew, the words he wrote in 1902: ‘Im tirtsu, ein zo agada’ (If you will it, it is no dream.)

Everything worthwhile starts with the desire to reach beyond the present, for something worth the huge effort and struggle.

Herzl also wrote: ‘Dream and deed are not as different as many think. All the deeds of men are dreams at first…’

I hope that this year we will see the realization of our hopes and dreams in finding oil and gas onshore Israel.

We have excellent equipment, we have an expert team and we have the determination to succeed.

So, here is this week’s operations update.

Drilling Operations at the Elijah #3 Well

The 2,000 horse power drilling rig, at the Elijah #3 site

In my update to you on Friday, December 18, 2009, I noted that:

…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.

For the period from ‘spudding’ the well (that is ‘beginning drilling operations’) to December 31, 2009, we drilled to a depth of approximately 9,186 feet (2,800 meters), at an average rate of penetration of approximately 131 feet (40 meters) per day. We have made good progress and are ‘on schedule’.

During the past three weeks, we continued drilling at an excellent rate and as of this morning, the Elijah #3 well has been drilled to a depth of 10,210 feet (3,112 meters).

We are currently drilling in the Asher Volcanic Complex, composed of tuffs, weathered basalts, non-weathered basalts, red shales and red and tan mudstones.

The Ma’anit-Rehoboth #2 Well

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

The last update (on December 18, 2009) is valid, but for ease of reference, here are the main details regarding this well:

By mid-September 2009, we had 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.

We used a workover rig for swabbing operations and retrieved a small quantity of crude oil that came from the open hole section below the last casing point at 15,830 feet (4,825 meters). A sample of the crude oil is being analyzed as part of the overall technical evaluation now underway.

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).

We continue to evaluate the steps that we can or should take in order to test the identified zones of interest individually. At this stage, it is critical that we use the correct equipment and utilize personnel with the proper training and expertise.

To that end we are carefully evaluating recommendations by our engineering staff and the availability of certain specialist equipment in Israel. So we thank you, in anticipation, for your patience while we work through the various recommendations.

As there is a great deal of technical evaluation work to be completed and we need to source some specialist equipment and services, it is currently anticipated that we will not resume testing procedures on the Ma’anit-Rehoboth #2 well until after March 2010.

The Issachar-Zebulun Permit Area

We have been reprocessing all of the existing seismic and I note that there is extensive coverage over most of the license.

However, in addition, we have been negotiating to sign a contract and have now verbally agreed with the Geophysical Institute of Israel to acquire, in March 2010, approximately 30 kilometers of field seismic, in the permit area.

Reprocessing the existing seismic will help us to better define the geological structures, while the 30 kilometers of newly acquired seismic line will help us to better define the Jordan Valley River stratigraphy.

In conclusion, we have much work ahead of us in 2010, but are optimistic that we are ‘closing in’ on our goal.

“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 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; email:

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