Letter from the President January 2015

A Letter from the President
January 2015


Dear Shareholder and/or Supporter,

Zion Oil and Gas, Inc. (“Zion” or “Company” NASDAQ: ZN), is a publicly traded oil and gas exploration company dedicated to finding oil and gas onshore Israel. I believe that by faith (Heb. 11:1) and diligent professional work we are in the best position ever to see exploration success in 2015.

In 2010, the United States Geological Survey issued a report stating that the Eastern Mediterranean’s Levant Basin contains an estimated mean of 1.7 billion barrels of recoverable oil and 122 trillion cubic feet of recoverable gas. As a result of ongoing evaluation of previous and newly acquired geological and geophysical data, we have substantially refocused our exploration strategy. We are concentrating our efforts on Zion’s 99,000 acre onshore Megiddo-Jezreel License, an area found entirely within the Levant Basin.

In the last five years, Houston-based Noble Energy has discovered about 40 trillion cubic feet of natural gas offshore in the Levant Basin and they have stated that “significant exploration potential remains on the Company’s acreage position in the Eastern Mediterranean, with approximately 3 billion barrels of gross unrisked oil potential in the deep Mesozoic play in both Cyprus and Israel…”

Noble’s recently announced plans to sell gas to Jordan, Egypt and the Palestinian Authority suggest that oil and gas sales may serve as a pathway to partnerships with entities often at odds with Israel – paving the road to a more peaceful coexistence.



Zion is now 100% focused on our Megiddo-Jezreel License area that appears to possess the key geologic ingredients of an active petroleum system with significant onshore exploration potential. We are currently developing key leads into drillable prospects.

In December 2013, Israel granted us the Megiddo-Jezreel License with a primary term through December 2, 2016. This was a key milestone in Zion’s future exploration success. We remain very excited about this new license which gives Zion the exclusive right to explore in a large area of approximately 99,000 acres (see map).

In 2014, Eskaton Seismic (U.S.-based seismic company) reprocessed about 168 kilometers of existing seismic data for us, significantly enhancing our geologic understanding of the subsurface. This past summer, the Geophysical Institute of Israel (GII) acquired 42 kilometers of new vibroseis seismic data in the area of our existing prospects. Eskaton and GII have now both completed computer processing for us. Based on our interpretations of the newly acquired seismic data, we have now selected the precise drill pad location from which to drill our next well (s).

Conducting a comprehensive environmental assessment of the area where we plan to drill and gaining official approval of such study is a key requirement before obtaining a drilling permit for our next well. This is a new legal and regulatory requirement as of July 2013.

Geo-Prospect (an Israeli geological, environmental, and planning company), continues to make good progress with our environmental impact study. We expect to complete the study and deliver it to Israel’s Environmental Ministry soon. Study topics include: ecology, hydrology (water), archaeology, acoustics, air quality, hazardous materials, pollution, land reclamation, drilling methods, risk mitigation, etc.

While we have many prerequisite steps before we can drill our next deep well, we plan to get to that point as expeditiously as possible. Under the license terms, we have until December of 2015 to begin drilling to a minimum proposed depth of 4,000 meters (~13,125 feet) and we intend to start drilling the Megiddo-Jezreel #1 well this fall.



The Asher-Menashe License expired in June 2014 as its full seven year term ended. Last May we submitted our Final Completion and Plugging Report for the Elijah #3 well. With this, we have plugged all of our wells but we acknowledge our obligation to complete the abandonment of our well sites in accordance with guidance from Israel’s Environmental Ministry and local officials.



In April 2014, we filed an application to merge the southernmost portion of the Jordan Valley License into the Megiddo-Jezreel License. We believe that there is significant exploration potential in this geologically linked petroleum system that overlaps the boundaries between the two licenses. Israel’s Petroleum Commissioner has notified Zion that the 10-member Petroleum Council has recommended approval to merge the southernmost portion of our Jordan Valley License into our Megiddo-Jezreel License. Under Israeli law, this Petroleum Council exists to review, advise, and recommend to the Minister of Energy and Water Resources on a variety of topics including transfers of exploration rights. Zion continues to await final consideration from Israel’s Minister of Energy and Water Resources for final approval.



We have worked hard to assemble an experienced and professional team focused on discovering oil and gas in Israel.

We commit to stay the course and fulfill Zion’s vision to render assistance to the Jewish people and Nation of Israel – to aid them in the Restoration of the Land by providing the oil and gas necessary to help Israel maintain her political and economic independence (Amos 9:14-15).

I am optimistic that the day draws near when our Zion team will achieve exploration success and our many years of hard work will bear fruit, both for Zion’s stockholders and for Israel.

I believe that the time is near indeed when Zion will discover (and recover) the oil and gas that lies deep under the Land of Israel (Gen. 49:25-26, Deut. 33:13-16). In the meantime, using our God-given reasoning and scientific analysis, our excellent staff will continue to work diligently and professionally towards that great day.


To see Zion’s latest news, please visit our website at: www.zionoil.com

Your ongoing prayers, support and trust are vital to us and I thank you for them.


Shalom from Texas,
Victor G. Carrillo


President and Chief Operating Officer
“And I will bless those who bless thee…”
Genesis 12:2-3