August Zion Oil & Gas Update

As a follow-up to our prior Plea for Prayer, here is a quick summary of key developments and our prayer focus points for which we seek the LORD’s guidance on a rig and funding with which to drill our upcoming 15,000 foot well:

Drilling Rig Status

Zion is aggressively pursuing all options to secure a drilling rig that will provide a path to drill the Megiddo-Jezreel #1 well. We continue our previously disclosed discussions with a U.S.-based oil field service company with global operations (“OFS”) to secure the use of a drilling rig through the formation of a special purpose subsidiary jointly owned by Zion and the OFS.

We are also considering other alternatives, including the acquisition of a drilling rig independent of the OFS in parallel with negotiations with third party service providers.

The purpose of reviewing all available options is to ensure that Zion is taking advantage of current market conditions within the oil field service sector from a commercial perspective while maintaining the objective of ensuring service quality in a timely manner.

Future Drilling Progress Status

On August 16, 2016, we signed an agreement with the Israel Lands Authority (ILA), the formal lessor of the land to Kibbutz Sde Eliyahu, to access and utilize the drill site.

Now that we have reached agreement with the local kibbutz and the ILA, we will be reviewing responses to a comprehensive bid proposal package that was delivered to various contractors to begin drill site construction in September/October (which should take 30-45 days to complete).

Zion currently has until December 1, 2016 to begin drilling, subject to the success of our capital raising efforts.

Depending on the results of the planned exploratory well and subject to adequate cash resources, multiple wells could be drilled from this pad site, as several subsurface geologic targets can be reached using directional well trajectories.

Zion’s Current Public Bond Offering

Zion must still raise substantial funds to be able to obtain a rig and crew to drill our upcoming 15,000 foot well in Israel.

We are currently in the midst of Zion’s $1,000 public bond offering. Unlike prior offerings, this is not a shareholder rights offering that is open only to existing shareholders.

Rather, this bond offering is open to all members of the public. This is a best-efforts minimum-maximum offering where the Company must raise a minimum of $2.5 million dollars to close on the offering.

The maximum amount we can raise under this offering is $12 million dollars, the proceeds of which will be used to drill the Megiddo-Jezreel #1 well.

Zion is offering (through Network 1 Financial Securities, Inc., our Placement Agent) 12% Convertible Senior Bonds to the public at principal or par value of $1,000.

Bond holders are entitled to receive a 12% annual interest rate paid on the Principal beginning October 2, 2017.

Interest payments will be paid annually, in arrears, either in cash or in kind (shares of Zion common stock).

The Final Closing Date is next week on September 1, 2016, and a representative from Network 1 Financial Securities may call to provide more information about the offering before the Final Closing Date, or you may call Network 1 or Zion directly. The Final Closing Date can be extended by Zion.

For more info on Zion’s 12% Convertible Bond Offering, click this link:

https://www.zionoil.com/bond-subscription-agreement-network-one-financial-zion-oil-gas/

Humbly seeking your ongoing support and prayers,

Victor G. Carrillo, CEO

This communication does not constitute an offer to sell, or the solicitation of an offer to buy, any securities, and there will be no sale of any securities in any state in which such an offer, solicitation, or purchase would be unlawful prior to the registration or qualification of such securities under the securities laws of any such state.

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 carefully 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. The offer of the 12% Convertible Senior Bonds is made only by means of the Prospectus Supplement dated May 31, 2016 of the Prospectus dated March 27, 2014, as subsequently amended, filed with the SEC, and related documents. A copy of the prospectus may be obtained, free of charge, on the SEC website at www.sec.gov, or by contacting us at info@zionoil.com or by calling at 888-891-9466.