A Closer Look at Givot Olam

Just south of Zion Oil’s Joseph license in Northern Israel lies the 60,000 acre Rosh Ha’ayin production lease belonging to Israeli oil company Givot Olam. A production lease, according to Israeli petroleum law, can only be issued after the exploration company has proven existing oil and/or gas reserves in place. In 2004 Givot Olam, through their three exploration wells, the Megeds 2, 3 and 4, proved to the Israeli government that there was oil under their exploration license … to the tune of nearly a billion barrels.

Despite attempts to develop the exploration wells, Givot Olam has yet to get commercial quantities of their oil discovery to the surface. The company began drilling the Meged #5 well last month, hoping to change their luck, take advantage of what they’ve leaned in the last five years and produce a sellable amount of oil.

Here’s something interesting; Givot Olam’s founder, Tovia Luskin, a trained petroleum geologist, began his quest for oil in Israel when he read about the prediction of vast petroleum reserves waiting to be discovered in the Holy Land. Would you like to know where Mr. Luskin first read about this possible discovery? The Bible … more accurately, the Torah.

Sounds familiar doesn’t it? Let’s put aside for a moment the fact that oil was discovered in Israel in 2004, by a company that based their search on scripture. Let’s put aside for a moment what the first fact does to the credibility of every critic and self-rising opinionater that has, over the last five years, trashed the idea that oil could ever be discovered in Israel based on scripture for the sole reason that it was based on scripture. Let’s put aside for a moment the fact that we’re not waiting for someone to discover oil in Israel – it’s already been done; we’re just waiting for someone to bring it up and put it in barrels. Let’s put all that aside and take a quick look at the man who first discovered the oil prophesied by Jacob to his sons nearly 4,000 years ago.

Tovia Luskin

In a story that seems to be dominated by Christian oil explorers, it’s a little ironic that the only oilman, using the same scriptures as the Christian explorers, to actually have a proven oil discovery in Israel, is Jewish.

Tovia Luskin, like his evangelical Christian counterparts, has been searching for oil in Israel for a long time now – more than twenty years. Like his Christian counterparts, Tovia used the Bible as his guide for finding oil in the Holy Land. Unlike his Christian counterparts, Tovia has actually discovered the oil promised to the Children of Israel in Genesis and Deuteronomy!

Luskin, a Russian Jew and a geologist, earned degrees in geophysics at Moscow State University. As a former lead geologist for Shell Oil and advisor to Bridge Oil in Sydney, Australia, his extensive background in the oil industry gave him the professional credence to back up his religious conviction that there was indeed, oil in Israel.

Working in Australia in 1988, Tovia, new as a practicing Jew, came upon a passage in the Torah in Deuteronomy.

Tovia is naturally quiet about sharing his religious beliefs concerning the oil with skeptics who would use them to discount his professional and technical efforts on the project. But to those sincerely interested, he happily quotes from memory the passage that began his quest:

About Joseph, he (Moses) said: “May the Lord bless his land with the precious dew from heaven above and the deep waters that lie below; with the best the sun brings forth and the finest the moon can yield; with the choicest gifts of the ancient mountains and the fruitfulness of the everlasting hills…”

(Deut. 33:13 NIV)

This passage in Deuteronomy along with his discovery that the medieval Jewish scholar Rashi interpreted the passage to mean that the “everlasting hills” were much older than the surrounding countryside was proof that he was on to something.

Rashi’s interpretation struck home with Luskin. He knew, as a geologist, that the concept of one geological feature (the hills) being of a different age than the land surrounding it was an accepted fundamental of modern geological science. But this concept was unknown in the time Rashi wrote his interpretation. In Luskin’s view, Rashi had no way of interpreting the passage this way other than by divine guidance.

These two proofs were enough for him to write to Rebbe Menachem Mendel Schneerson, one of the world’s renowned Jewish scholars, for his review and consideration of the interpretations. After reviewing his material, the Rebbe, responded noting, “I had pleasure in reading your discussion …” and “… You will tell me good news ….”

This was enough for Luskin to take action. He traveled to New York for a personal audience with the Rebbe. The Rebbe pronounced over him a Bracha (blessing) regarding his proposed search for oil in the Promised Land, “You have my blessing that you will have good news in the near future.” This innocuous sounding blessing carried tremendous authority for Luskin. He believed the Rebbe to be G_d’s Moshiach (Messiah), the one to bring redemption to the Jews. This was enough for Luskin to sell his home in Sydney, Australia and immigrate to Israel.

By 1993 Tovia Luskin had assembled a team of geologists and oil experts (most of them Russian from his previous acquaintance at Moscow Sate University) to form Givot Olam Oil Exploration, LLC. Givot Olam, Hebrew for “everlasting hills,” secured a 62,500 acre exploration license just north and east of Tel Aviv.

Their first well, the Meged 2, was drilled in 1994 and successfully tested 40° API oil at 17,000 feet. In 1998 the Meged 2 was retested and showed a 400 barrel per day flow rate. The Meged 3 well was drilled two years later a few miles to the west of the Meged 2. This well logged 47 feet of pay (the vertical area of the well from which to extract oil) at 15,000 feet deep, but had to be shut down because of mechanical problems in the hole. The Meged 4, north of the Meged 2 and Meged 3, was drilled in 2003. At 16,000 feet the Meged 4 began flowing oil and gas. The rate of flow was unspecified but Givot Olam reported a commercial discovery of 980 million barrels. With the Meged 4 discovery the Givot Olam eighteen month exploration license became a thirty year production lease.

Today Givot Olam is in the process of developing the Meged Oil Field with plans for 10 wells in a 50 square kilometer project area. With proper development each well is conservatively estimated to produce over 900 barrels per day for the first year, and then decline to a steady 400 barrels per day over each well’s seven year expected lifespan. The ten wells in this field, roughly one-fifth of Givot Olam’s production lease area, in the conservative view is capable of producing over 12 million barrels of oil over the next seven years.

Israel has only produced 20 million barrels in its entire fifty year history of oil production. Personally Luskin estimates the Givot Olam lease area to hold as many as a billion barrels of oil. Twenty percent of those billion barrels, Luskin believes, is recoverable. Two hundred million barrels … not bad for Jewish Russian immigrant using the Torah and his Rebbe’s blessing as a guide!

Stephen Pierce Featured in Zion Weekly Update

Zion Oil’s exploration manager was featured in last week’s company update to shareholders.

In February 2005, Stephen was retained as Zion’s consulting geologist for the drilling of the Ma’anit #1 well. He joined us on a full time basis in October 2005 and was appointed our Exploration Manager in June 2006.

Before joining Zion, Stephen was a project geologist in the Caribbean as well as a consulting geologist for several onshore and offshore projects in the U.S., the Dominican Republic, Colombia and Guyana.

He was senior geological adviser for Mobil Oil Corporation and worked as a senior geologist for both Superior Oil Co, AMOCO and as a geologist for UNOCAL.

Stephen has both a B.S. and M.S. in geology and holds the title of Professional Geologist in Wyoming and memberships with the American Association of Petroleum Geologists and the American Institute of Professional Geologists.

Stephen Pierce is also the author of Stones of the Bible; a fascinating text on the stones mentioned in the Bible. The book is a high quality spiral bound field guide with beautiful color plates of each stone mentioned in scripture. Stones of the Bible is available to ‘Oil in Israel’ readers for just $15.96 (plus shipping), that’s 20% off the $19.95 cover price. To order go to: http://stonesofthebible.com or call the publisher toll free at (888) 543-8028 (don’t forget to mention that you’re an ‘Oil in Israel’ reader for your discount).

Zion Drilling into the Permian

Zion Oil & Gas reports in their weekly update that they have finished Triassic logging operations and have resumed drilling at the Ma’anit-Rehoboth #2 to a finished depth of 18,000 feet; well into the Permian.

A couple of questions keep coming up:

1. Why did they stop at the Triassic and what do they expect to find there?

2. Why is the Permian so important?

I’ll try to answer those questions from an amateur’s perspective.

Q: Why did they stop at the Triassic and what do they expect to find there?

A: Because of their experience and data from the Ma’anit #1 well, drilled in 2005, they have a pretty good idea of what they’ll find in the Triassic this time. The Ma’anit #1 yielded hydrocarbon shows from 12,000 to 15,500 feet (the bottom of the hole).  At 15,128 feet they encountered heavy salt water with oil on top.  At 14, 245 – 14, 593 feet they encountered hydrocarbons again (and water again).  Finally, at just under 14,000 feet Zion encountered natural gas and were able to maintain a six to ten foot gas flair at the well head. When they shut the well down for evaluation, water infiltrated the hole again and they elected to give up on developing the Ma’anit #1. Translation – Zion knows they’ve got gas, or gas and oil between 12,000 and 15,500 feet because they’ve seen it. With better equipment and fore-knowledge of what to expect, they had a lot of confidence in what they would find in the Triassic strata this time. Wire logging in the Triassic is finished, they’ve seen the initial data, but news of what the Triassic holds won’t go public until the data is confirmed.

Q: Why is the Permian so important?

A: Zion Oil’s research in 2007 confirmed that northern Israel sits on top of a formation called the ‘Permian Arqov’ and that this formation is of the “same age and depositional environment” as the ‘Permian Khuff’ formation in the Persian Gulf that holds 25% of the world’s known natural gas reserves. Noble Energy’s massive natural gas discovery off the Haifa coast certainly supports the idea that there’s a lot of natural gas in Israel. If Zion taps into an enormous field of natural gas, along with Noble’s off-shore discovery, Israel may become one of the world’s significant energy exporters. The Permian also holds most of the world’s oil reserves. If Zion discovers a lot of oil, it will most likely be found in the Permian.

Zion’s CEO Richard Rinberg isn’t saying much of anything about initial test results from the Triassic or of what Zion hopes to find in the Permian, and rightly so; he’s the guardian of a public company. Anything he says, positive or negative, has an effect on the company’s value and the shareholders’ investment and trust. He’ll make darned sure that what he announces, when he announces it is fact; in his position there’s no room for conjecture.

I’m not an employee of Zion Oil and this newsletter and the oilinisrael.net website is completely independent of Zion Oil or any other exploration company in Israel, but outside of Zion’s managers and few Israeli oil professionals and government officials, it’s fair to say that I know more about the history of Israel’s search for oil, biblical or otherwise, than any other ‘outside’ observer. So until we hear official news of what the Ma’anit-Rehoboth #2 holds for Zion Oil, I’ll keep telling you what I know.

Zion Oil July 3-2009 Update

Dear Shareholder and/or Friend of Zion…

How many people does it take to drill a deep well in Israel?

It seems that the answer is: ‘A whole lot…’

The picture above was taken this week, on Monday at noon, when the daily rig worker shift-change occurs.

As you can see, thirty eight of us gathered in front of the main gate to the drillsite and dutifully smiled (or grimaced) at the camera.

The people in the identical red clothes are Aladdin’s Turkish rig crew, the people in orange clothes are from Baker INTEQ in Italy. Most of the rest are Zion personnel from Israel and the USA.

And so, we fly the Israeli, Italian, Turkish and U.S. flags. A truly international effort.

In deference to those hard at work in Zion’s Dallas office, we are also flying the ‘Lone Star Flag’ (the Texas flag). The 1933 Texas Flag Code assigns the following symbolism to the colors of the Texas flag: blue stands for loyalty, white for purity, and red for bravery.

These are all qualities needed when drilling such a deep well.

Drilling Operations on the Ma’anit-Rehoboth #2 Well

In past weeks, we have drilled this well to approximately 15,850 feet, into the Triassic geological layer, but this week, we have been ‘logging’ the well. (Next week, we will continue drilling to our final target drilling depth, at approximately 18,000 feet in the (deep) Permian geological layer.)

Having reached 15,850 feet, after the drill pipe has been taken out, what is left is a 15,850 feet, mud-filled, cylindrical hole in the rock. So, we now carry out the ‘logging’, that is, test and evaluate the well, using electrical wireline well logs. We are running ‘open-hole’ logs, that is, the well has bare rock walls (with no casing).

A ’sonde’ is lowered down the hole on a ‘wireline’ and various measurements are recorded.

The ’sonde’ is a cylinder filled with instruments that can sense the electrical, radioactive and sonic properties of the rocks (and their fluids) and the diameter of the wellbore.

The ‘wireline’ is an armored cable with steel cables surrounding conductor cables in insulation. It is reeled out from a drum in the back of the logging truck.

The data from the sonde is transmitted up the cable to instruments in the logging truck and recorded on a long strip of paper.

As I mentioned last week,we are using some state-of-the-art Baker Atlas logging equipment, so we hope to obtain very high-quality data.

One of the logs being run is a ‘natural gamma ray log’. This uses a scintillation counter to measure the natural radioactivity in the rocks along the wellbore. The gamma ray log is plotted with low radioactivity to the left and high radioactivity to the right. Shales (a very common sedimentary rock) are ‘hot’ and kick to the right. Sandstones and limestones, potential reservoir rocks, kick to the left. The amount of shale in a sandstone or limestone can be computed from its radioactivity on a gamma ray log.

Another log being run is the ’spontaneous potential log’. This measures the electrical current caused by the contact of mud filtrate in the pores of the rock with the natural waters in the rock.

In all we will be taking seven separate measurements and our geologists will certainly be busy with data analysis and evaluation…

I’ll mention that, not only will there be an in-house evaluation of the logging but also an independent analysis by a Houston consultant.

We want to be certain of our conclusions.

Rights Offering

Our staff are busy finalizing the closing of the rights offering, the shares to be issued and the money to be returned as a result of the over-subscriptions received in the rights offering. We are trying to complete this as soon as possible. If you subscribed, thank you for your support and your patience.

RUSSELL Indexes select Zion Oil & Gas (ZN)

On Friday, June 26, 2009 Zion was included in the Russell 3000 ® Index, a value weighted index that measures performance of the top 3,000 stocks of the investable U.S. equity market.

You may have noticed that, on that Friday, the volume of Zion stock traded was over 2.1 million shares and the price jumped dramatically.

This was almost certainly due to the index funds buying ZN stock to ensure that they are correctly balanced to track the index.

As Warren Buffet has commented: “In the short term the market is a popularity contest; in the long term it is a weighing machine.”

To have a sustained high share price in the long term, we will need a ‘discovery’ of hydrocarbons. And that is exactly what we are working on.

Exult and shout for joy, O Zion dweller
for the Holy One of Israel is great in your midst.

Isaiah 12:6

Thank you for your continued 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, drilling efforts 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.

More information about Zion is available at www.zionoil.com or by contacting Kim Kaylor at Zion Oil & Gas, Inc., 6510 Abrams Rd., Suite 300, Dallas, TX 75231; telephone 1-214-221-4610; email: dallas@zionoil.com

Contact Information
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
phone: 1-888-891-9466

Givot Olam Resumes Drilling

“The blessings of your father excel the blessings of my ancestors and the bounty of the eternal hills. May they rest on the head of Joseph, on the crown of the prince of his brothers.” (Genesis 49:26)

Zion Oil Reaches Permian Target