Press Release: February 5, 2020 – Zion Oil & Gas enters LOI to Purchase a Drilling Rig for Israel Operations
Zion Oil & Gas enters LOI to Purchase a Drilling Rig for Israel Operations
Zion announces the incorporation of two subsidiaries: Zion Drilling, Inc., and Zion Drilling Services, Inc.
DALLAS, Texas, and CAESAREA, Israel, February 5, 2020
Zion Oil & Gas, Inc. (Nasdaq: ZN) announces they have entered a partially binding letter of intent to purchase a drilling rig and has formed two wholly owned subsidiary corporations.
“We have signed a letter of intent to purchase a drilling rig for Zion’s ongoing 2020 exploration plans,” Zion’s COO, Robert Dunn said. “This rig will have increased capabilities for onshore drilling in Israel, and we see it as a vital part of our operations going forward.”
“We were fortunate to find this rig and believe it is an ideal fit for our plans,” stated Zion’s President, Bill Avery. “We are thankful for our shareholders’ ongoing support which will enable us to close the purchase of the rig with immediately available cash at closing.”
LETTER OF INTENT FOR DRILLING RIG
Zion has entered into a partially binding letter of intent to purchase a drilling rig, drill pipe, and all related equipment for importation into Israel to continue its exploration plans.
The rig is a 1600 horsepower AC Top Drive equipped rig with a twin 1600 horsepower mud pump system with a depth capability of 20,000 ft. The rig will be equipped with 15,000 ft of heavy 5” drill pipe along with associated well control equipment.
1600 horsepower AC Top Drive equipped rig capable of 20,000ft depth
The rig underwent a full CAT III & IV certification in late 2017, reassuring the quality of the rig and ancillary equipment, and it has drilled two wells since certification.
Zion and the seller plan to immediately begin negotiating a definitive purchase agreement to close the purchase of the rig for the agreed sum of $5,600,000, subject to satisfactory due diligence. The rig purchase will be a cash purchase payable in full at closing, with no financing required.
TWO SUBSIDIARIES FORMED
On January 24, 2020, Zion incorporated a wholly-owned subsidiary, Zion Drilling, Inc., a Delaware corporation, for the purpose of owning the rig and related equipment, and on January 31, 2020, Zion incorporated another wholly-owned subsidiary, Zion Drilling Services, Inc., a Delaware corporation, to act as the contractor providing such drilling services.
When Zion is not using the rig for its own exploration activities, Zion Drilling Services may contract with other operators in Israel to provide drilling services at market rates then in effect.
Zion has the trademark “ZION DRILLING” filed with the United States Patent and Trademark Office and with the World Intellectual Property Organization in Geneva, Switzerland, under the Madrid Agreement and Protocol. Also, Zion has the trademark filed with the Israeli Trademark Office in Israel.
Zion Oil & Gas, a public company traded on NASDAQ (ZN), explores for oil and gas onshore in Israel on their 99,000-acre Megiddo-Jezreel license area.