“Special Report – Zion Oil”

(Zion CEO Richard Rinberg (c), VP Victor Carrillo (l), and President Bill Ottavianni (r))

What’s in Store for Zion Oil & Gas?
I get e-mails and comments to this website (a lot of e-mails and comments) with questions about the future of Zion Oil & Gas. The emails and comments traffic goes way up whenever there’s a big rise or a big dip in Zion’s daily stock price. When the stock goes up Zion fans are dancing in the streets; when it goes down there’s sackcloth and ashes. The questions that come to me invariably take the form of, “What has Zion done to make their stock go up?” or “What have they done to make their stock go down?”

The answer? From my perspective, a definite long term perspective, nothing unusual. Zion operates day to day, week to week, month to month, and now year to year, in a pretty methodical manner. Plan, test, explore, review, repeat. I’ll admit, it’s not a very exciting methodology, but I’d rather have a dull methodology with exciting (long term) results than exciting methodology with no results (there’s been too much of that from other ‘explorers’ already).

So why does Zion’s stock go up and down? I’m no stock whiz, but from what I’ve seen at least some of it has to do with what’s happening outside of Zion. Earlier this year Zion’s share price spiked from under $4.50 to nearly $6.00 in a few days. The reason? Zion Oil & Gas attended the National Religious Broadcasters Convention in Nashville where religious (and secular) press took advantage of the situation, asked for interviews with Zion Founder John Brown and CEO Richard Rinberg and reported Zion’s story. The stock went up – there wasn’t a change in the company’s exploration strategy or operations, John and Richard just shared Zion’s story.

A few months ago Zion’s stock took off again (from about $4.75 to nearly $7.00). Why? Part of the reason may have been that Zion announced it had reached target depth on their Ma’anit-Joseph #3 well. Another part may have been that the Dow Industrial Averages jumped at the same time … most stocks were going up, Zion’s did too.
Just lately, Zion’s stock has taken a nosedive. Why? Part of the reason may be that testing showed Zion’s Ma’anit-Joseph #3 to be ‘non-commercial’. Another part of the reason may be that Stock markets (in the US and abroad) took an historic nosedive in the last few weeks. Noble Energy has discovered the largest gas find in Mediterranean history and their stock dove 20% when the markets went into free fall.

What’s the moral to my story?
I’m not a stock analyst and don’t want to be. To me it’s just gambling; trying to predict tomorrow with averages, spreadsheets and theories … or rumors. Events are going to happen outside and inside a company that’ll probably make it’s stock go up and down. If you’re a day-trader (someone who buys and sells daily, gambling on tomorrow’s stock report) I guess daily ‘events’ float your boat.

But (I don’t believe) a company like Zion Oil & Gas is for day traders. It’s for those of us in it for the long run. The only two ‘events’ worth paying attention to would be a commercial discovery or Zion closing up shop. They haven’t made a commercial discovery (yet) and they have no intention of closing up shop. So until either of those two events transpire I’ll look for long term strategy to achieve long term results. Is the company doing what it set out to do?

Zion Oil & Gas was founded to discover oil and gas in Israel. They’re doing just that. They’ve drilled four wells to date, none commercial, but they’ve learned from each well. Zion’s Chief Geologist Stephen Pierce says that, on average, only one in nine exploration wells produces oil or gas in commercial quantities. A few years ago, because they knew they had to go deep, Zion flew to Turkey and secured a drilling rig twice the size of anything available in Israel. That rig just finished the deepest well ever drilled in Northern Israel. This week Zion geologists will participate in advanced mapping methods training host by one of the world’s best (if not the best) seismic software companies. Zion’s geology and exploration teams work every day to cut down those one-in-nine odds.

Zion started out with a 28,800-acre license. Today they have 218,000 acres of exploration territory and have applied for another 312,000 acres. 530,000 acres of exploration territory would make Zion the largest, by far, onshore exploration company in Israel.

In the last few years Zion has continued to successfully raise capital in spite of the worst economic/investment environment this country has experienced in decades. Today, they’ve got $29,260,00 in the bank.

When Zion started, discovering oil and gas in Israel was a myth; today it’s a fact, backed up by the world’s biggest gas find in more than a decade, a USGS study stating (conservatively) that there are significant oil and gas reserves in Israel, and recent news that Israel contains the world’s second largest deposits of oil shale.

Bottom line:
I’ll look at Zion’s stock price after they’ve discovered oil. Until then, I’ll look at Zion for how well they’re accomplishing their mission. More importantly, I’ll look to the One who gave Zion the mission. Israel has already discovered more natural gas than they will ever use. I believe oil is right behind it – G-d has already promised it.

Libya war a precursor to Ezekiel 38-39?

The Wall Street Journal Reported today: “Oil futures settled at their highest level in 2 1/2 years Wednesday as air strikes continued against Libya and the U.S. reported a sharp drop in gasoline inventories.” On New York commodities markets, ‘Light Sweet Crude’ settled at $105.75 a barrel, the highest we’ve seen since September 2008.

The US and Allied forces air strikes on Col. Moammar Gadhafi’s military infrastructure and Western sanctions have stopped the 1.3 million barrel per day of Libyan output and have caused commodity futures traders to speculate that oil supply will get worse before it gets better. Kyle Cooper, managing partner at IAF Energy Advisors in Houston stated in the WSJ article, ”If this spreads into Saudi Arabia, $120 a barrel is going to look cheap. People are scared to death to be short.”

In Bible prophecy, Libya is included in the Russian-Iranian alliance against Israel in “the last days.” Ezekiel 38-39, tells us that ‘Put’ is one of the nations that joins the ‘Gog/Magog’ alliance against the nation of Israel. Ancient historian Flavius Josephus records that ‘Put’ or ‘Phut’ is ‘Libyos.’ Ancient Libyos included the territory of modern Libya. Regardless of the outcome of the current military and political struggle in Gadhafi’s Libya, Bible prophecy tells us that one day, Libya will be a part of the alliance with an ‘evil thought’ in its head, to invade the land of Israel to take a ‘spoil’ – maybe oil? Bible prophecy seems to be coming into fullness on almost a daily basis in Israel. Is the current Libyan war a precursor to the fulfillment Ezekiel 38-39? We’ll keep watching.

Natural gas discovered in Israel’s Hula Valley

Canadian exploration company, Adira Energy has found signs of natural gas in their test wells in Northern Israel’s Hula Valley. Adira’s drilling team has reworked three existing wells on its 31,060 acre Eiten license, all of which test positive for gas presence. According to company information, one coal-bed methane (“CBM”) well tested 200 mcfd (million cubic feet per day/about US$800 per day at current market prices) with a static pressure of 600 PSI.

Adira’s Hula Valley gas wells are relatively shallow, reaching ‘coal-bed methane’ between 400 and 800 meters (1,300 – 2,600 feet).

Adira Energy also owns the Hula Valley onshore Notera license (18,500 acres and the Israeli offshore licenses Gabriella, Yitzhak and Samuel (145,000 acres collectively).

Israel could transform global energy markets

In a March 11, 2011 Jerusalem Post article Dore Gold, president of the Jerusalem Center for Public Affairs and former Israeli ambassador to the UN stated that Israel’s newly discovered fossil fuel reserves could ‘revolutionize the global energy sector’.

Dor stated in the article, “Libyan oil accounts for less than 2 percent of world oil production, yet the revolt against Muammar Gaddafi has managed to shoot up the price of oil to more than $100 per barrel in the last month.”

The article goes on to report that, at the same time Israel holds the world’s third largest oil shale deposits and, because Israel’s Tamar gas field is capable of supplying the country’s domestic natural gas fields for the next twenty years, 100% of the gas harvested from the Leviathan field (estimate at twice the volume as Tamar) could go to export markets.

What does this mean? As Middle East oil supply from Arab countries becomes more expensive and more politically contentious, Israel’s energy exports from existing and pending discoveries should be coming online.

Bottom line: Israel energy exports in the near future could very well change the political and economic landscape in the Middle East. With Arab political regimes falling apart at the seams and oil prices spiking with the evening news, the fact that the only stable democratic government in the region and America’s best friend (yes, it’s still true) in the Middle East may very soon be one of the world’s energy exporters is a comforting thought. Go Israel!

Click here to read the full Jerusalem Post article.

Broadcasters buzz about Zion Oil & Gas at NRB

Earlier this month the annual National Religious Broadcasters Convention in Nashville, Tennessee was a buzz over Zion Oil’s recent exploration for oil and gas in Israel.

Christian television and radio broadcasters, including American Family Radio, Christian Television Network, the Herman and Sharon Show, Faith Radio with Bob Crittendon, and Charles Crismier’s “Viewpoint” news radio show hosted Zion Oil & Gas Founder John Brown and CEO Richard Rinberg as they had shared Zion’s vision and exploration activities in Israel with their audiences around the world.

“As believers (biblical prophecy being fulfilled in Israel) should be important to all of us as far as carrying the message that we have … other people need to know that truth, that Jesus is the Messiah. And when G-d puts something in Torah and in the Tenach, that is His Word and His Word should not be doubted.” John Brown stated as he discussed the biblical prophecy of a massive oil and gas discovery currently being fulfilled in Israel today.

Charles Crismier’s radio interview with John Brown and Richard Rinberg can be heard in its entirety at: http://archives.inforadionet.com:8080/viewpoint/vp030111.mp3

Noble Energy delays Leviathan oil drilling

Since its massive natural gas discovery in the Leviathan field offshore of Israel, Noble Energy has suspected that commercial oil reserves may lie beneath the gas find. Plans to begin oil drilling in Leviathan’s two lowest strata have been delayed for a month due to technical concerns.

In a March 11 interview with Israeli news agency Haaretz, Epsilon Investment House energy analyst Ron Alkon stated, “A month’s postponement of the results isn’t, in itself, a sign that there is no oil. Since it is almost without precedent to be drilling for oil at these depths, and to avoid environmental problems and other possible malfunctions, they are taking their time to be prudent. It shows that there is still a considerable chance of finding oil. Just the fact that they intend to invest an additional $40 million in advance shows that the possibility is there.”

The Haaretz article continues:

“Drilling from the Sedco Express platform at Leviathan 1 has reached a depth of 5,100 meters – to the first layer of sand where advanced geological testing was performed in discovering natural gas.

“The next stage is drilling 700 meters further, to the layer geologically referred to as the Lower Oligocene Age, where Noble estimates an average economic potential for usable oil reserves of about 3 billion barrels at a geological probability of 17%.

“After this stage the partners intend to drill deeper still to test another prospect at a depth of 7,200 meters. Here Noble estimated the economic potential at equivalent to 1.2 billion barrels of oil, but at a mere 8% probability.”

Noble’s oil exploration drilling into these strata is expected to commence in early May.

Israel’s gas will flow by 2013

Delek’s Delek Group Ltd. (TASE: DLEKG) controlling shareholder, Yitzhak Tshuva, promised to speed up development of the Tamar natural gas field so that gas will flow to Israel in 2013. Production development from Israel’s Tamar gas fields had been debated because of Israel’s gas deals with Egypt. Due to the recent political uprising in Egypt, gas supply to Israel has been cut off (40% of total gas imports) leaving Israel in an energy crisis.

Globes News Wire (http://www.globes.co.il/serveen/globes/docview.asp?did=1000627225&fid=1725) reported Tshuva’s comments to  to the “Calcalist” Energy Conference yesterday March 2. ”We are working round the clock. Despite delays and difficulties in financing the project, because of the Sheshinski recommendations, I say and commit that we will beat the original deadline. Gas will reach Israel’s shores in 2013.”

“We will meet all of Israel’s needs, and we will do what is required of us. I believe that we’ll reach understandings with the Ministry of Finance regarding an agreement with Israel Electric Corporation (IEC) (TASE:ELEC.B22) and financing. We didn’t wait for financing to move forward, and as of now we’ve invested $1.4 billion in the project, and we’ll meet all that is required of us.

“Development of energy is of unparalleled importance. We’re seeing the difficulties in the world which have caused a rise in the global price of oil, and we must appreciate Israel’s achievements to date. We must continue to invest and develop, and believe in what we do, because we’re building the State of Israel and must protect it and make it energy independent. For this purpose, we must have an agreement with investors and developers to keep up the momentum. We want to be a major player in the global energy market, which will give us political power, as well. Use of gas will save more than 50%, lowering vehicle costs accordingly, and this money will stay in Israel.”

Video Shoot at Zion’s Ma’anit-Joseph #3 Well

We (True Potential Media) traveled to Israel for a week of shooting video at Zion Oil’s office in Caesarea, their Ma’anit-Joseph #3 well site in Northern Israel, and in Jerusalem. Zion Founder John Brown, CEO Richard Rinberg, President and CEO Bill Ottaviani and Executive VP Victor Carrillo were on-site in Israel for interviews on the vision and progress of Zion Oil’s mission in Israel.

The video, photographs, and other content produced during the shoot will be compiled and presented over the next few weeks and months as Zion shares its story and its vision with the world: ” … to assist Israel in the restoration of the Land by finding and producing oil and gas – helping to make Israel politically and economically independent.”

Visit the Oil in Israel and Zion Oil Facebook pages as we add photos to the Israel albums.

Egypt Shuts off Israel Gas

Back in December I wrote “Egyptian Gas Deals Threaten Tamar Exploration” and a reader asked (I paraphrase), “What does Egypt have to do with oil and gas in Israel?”

As we’ve watched a revolution in Egypt unfold from our TV screens in the last two weeks, we now know the answer to our reader’s question … plenty!

Al Jazeera reported on Saturday. “Egypt gas pipeline attacked“. Israel gets about 40% of its natural gas from Egypt, from the Egypt gas pipeline. Fortunately, the terrorists blew up the side that supplies gas to Jordan rather than Israel. Unfortunately, Egypt shut down the gas pipeline to Jordan and Israel until they could quell the terrorist activity … which may be awhile. That means 40% of Israel’s natural gas requirement isn’t getting to Israel right now. According to a UPI report out today, that’s costing Israel $1.5 million per day in ‘alternate’ energy sources.

Al Jazeera reminded readers: “Israel is realising that their good friend (Mubarak) is on his way out, and they are not sure who is on the way in.”

Forbes’ Chris Barth asked the question in his Monday blog: “Will Egypt Protests Boost Israel’s Budding Energy Market?” Barth says:

“As protests in Egypt continue, investors are pondering the future of Israel’s energy supply, with one eye on Cairo and the other on Israeli energy companies. Although Israel has been quickly moving toward a more diverse energy structure, however, it still relies on Egypt for a full quarter of its energy needs, mainly natural gas delivered via the Arish-Ashkelon section of the Arab Gas Pipeline. Indeed, existing contracts with Egypt seem to prevent any large-scale shakeups in Israel’s energy imports, even in the face of recent domestic natural gas discoveries. Despite what has been a nerve-wracking month for energy-minded Israeli investors wary of instability, the state’s reliance on Egyptian gas doesn’t look to be going away any time soon.”

Israel’s gas supply from Egypt has been cut off by the unrest and terrorist bombings in Egypt. It’s long term gas supply from Egypt is jeopardy, depending on whatever form of government comes up on top after the revolution. No more gas from Egypt – that’s bad news for Israel, right?

Maybe not. In the short run it certainly hurts now; but in the long run, Israel, I believe,  will be much better off.

Remember what I said in December’s article? “Egyptian gas deals threaten Tamar exploration.” The sweetheart gas deal Israel has had with Egypt for the last thirty years as a stipulation of the Camp David Peace Treaty (40% of Israel’s natural gas imports) means that actually producing the gas discovered inside Israel’s territory has been slowed or even threatened because Israel prefers cheap Egyptian gas to paying the price of getting Israeli gas to market. Why build Israeli infrastructure when we can get Egyptian gas for a few shekels less?

I’ll tell you why – sometimes ‘cheap’ isn’t so cheap. The Egyptian sweetheart gas deal won’t last forever – as far as we know, we could be witnessing its death on Cairo’s Tahrir Square right now. With not-so-friendly neighbors surrounding her and political turmoil rebooting the Israel ‘friendly’ Egyptian government, it’s a pretty good bet that the foreseeable future of  ‘cheap’ Egyptian gas for Israel may be ticking down.

For Israel, energy isn’t just an economic issue it’s a national security issue. If Israel has a domestic energy source available she’d better start developing the infrastructure to bring it to market. Relying on the neighbors for natural gas doesn’t seem like such a good long term strategy anymore … even if it’s cheap.

Israel Approves Doubling Oil & Gas Taxes

Israel Approves Doubling of Taxes on Oil and Gas Extraction Profits

New York Times By ETHAN BRONNER

Published: January 23, 2011

• JERUSALEM — The Israeli government on Sunday approved a near doubling of the profit tax on gas and oil extracted from its territory, a move of considerable significance in the wake of recent offshore gas discoveries expected to be worth tens of billions of dollars.

The cabinet voted overwhelmingly to accept the recommendations of a government committee to tax energy profits between 52 and 62 percent and to set aside a special fund from the income aimed at a range of public needs.

“I intend to establish a fund for Israel’s future that will be devoted to education and security,” Prime Minister Benjamin Netanyahu said at the cabinet meeting. Parliamentary approval is considered a certainty, but debate will doubtless occur on the priorities of the new fund.

In the past few years, about 25 trillion cubic feet of natural gas have been discovered off Israel’s northern shore, enough to turn it from a vulnerable energy importer into a robust exporter. In recent weeks, exploration companies have announced a 20 percent likelihood of there being four billion barrels of oil under the gas, which could prove still more significant.

The companies, along with some conservative political forces, have fought hard against any increase in the profit tax, saying that the cost of exploration is so high that the rate will endanger the viability of the enterprise.

But Eytan Sheshinski, a Hebrew University economist who led the government committee that recommended the increase, said the new rate was slightly below the average of the Organization for Economic Cooperation and Development, a group of more than 30 countries that Israel recently joined.

“We often chide ourselves in Israel that our policy-making decisions lack real planning,” Mr. Sheshinski said in a telephone interview. “Yet here was a process in which the committee sat for nine months, taking testimony that added up to thousands of pages. This was a real process of which we can all be proud.”

Finance Minister Yuval Steinitz said after the cabinet vote, “Today the government will put an end to the disgrace in which the citizens of Israel do not benefit from the country’s natural resources, as do the citizens of other developed nations.”

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