Dead Sea Well Approved for Drilling

Shahar prospect gets nod for drilling

The well, due to begin drilling in the second quarter, is targeting oil-bearing strata at a depth of 3,300 meters.

Globes 31 January 11 12:22, Yael Gruntman

The Southern Regional Planning and Building Commission has approved the drilling of the Shahar 1 well, scheduled to begin in the second quarter of 2010. The well will drill to deep oil-bearing target strata.

Ginko Oil Exploration LP, which fully owns the license, has two positive opinions about the amount about the amount of oil in the license area: one by Dr. Haim Fliegelman, who estimates 260 million barrels of oil, and a second by UK consultancy firm Simco Petroleum (Management) Ltd., which estimates 9-138 million barrels of oil in the target strata.

At the current price of oil of $90 per barrel, the high-end estimate of 260 million barrels of oil is worth $23.4 billion, and the mid-range estimate of 41 million barrels of oil is worth $3.69 billion. Either way, the field has huge potential.

The Shahar license covers 389,000 dunam (97,250 acres) south of the Arava junction at the southern end of the Dead Sea valley. The Shahar 1 well will drill to 3,300 meters at a cost of $9 million. Lapidoth Israel Oil Prospectors Corporation Ltd. (TASE: LAPD) will probably be the well contractor.

Ginko, which owns the Shahar license, is in the final stages of merging with stock market shell Simcha Urieli & Sons Engineering & Construction Co, Ltd. (TASE: UREL), after Urieli’s shareholders approved the merger agreement last week.

Oil Discovered in Northern Israel

In case anyone missed it last summer, oil has been discovered in Northern Israel. We’re not waiting for an oil discovery – it’s already happened! The oil has been/is being produced and sold. What’s more, the exploration company, Givot Olam, based its search for oil in Israel on Scripture. That’s right, oil has been discovered in Israel, based on Bible passages predicting the discovery and its location. The same Bible (Torah) passages used by my father, Jim Spillman, back in 1981 in his book, The Great Treasure Hunt. The same passages Zion Oil & Gas Founder John Brown heard Dad teach on a Zion Temple in Michigan thirty years ago and took to heart. Included Jacob’s Blessing, recorded in Genesis 49 and Deuteronomy 33, is the prophecy of a last days oil discovery. Jacob’s descendants will be blessed from the “deep that coucheth beneath”; “for the chief things of the ancient mountains, and for the precious things of the lasting hills, and for the precious things of the earth.” Issachar and Zebulun “shall suck of the abundance of the seas and of treasures hid in the sand.” Asher will “dip his foot in oil.”

The prophecy of oil in Israel isn’t going to be fulfilled someday – it is being fulfilled as we watch!

A January 13 Globes Article follows progress at Givot Olam’s Meged 5 well site; I’ll share a few excerpts here:

“Givot Olam Oil Exploration LP (TASE:GIVO.L), which is currently fracing (hydraulic fracturing) sections of its Meged 5 well and carrying out production tests, is seeking to cool investors’ enthusiasm after yesterday’s flare at the wellhead, which indicates the presence of fuel at the well. The scale of production, if any, is unknown, but the flare is a routine procedure during production tests.”

“A few months ago, Givot announced that production tests conducted during the summer produced an average of 382 barrels of oil a day. Fracing is now underway in sections 1-6 of the borehole to speed up the production rate, and production tests are underway of sections 7-8.”

“Givot sold 6,000 barrels of oil produced during last summer’s production tests to Oil Refineries Ltd. (TASE:ORL) at the below market price of $60 per barrel. It cannot be ruled out that oil currently being produced is also being sold to Oil Refineries, and is why there are oil tankers at the wellhead. However, how much oil is being sold is not known.”

“A capital market source close to the matter told “Globes”, “When you peel away all the conduct of the past year, Meged 5 ultimately has something real.”

Givot’s Meged 5 is just the beginning of onshore oil discoveries in Israel. I believe Givot will drill more and produce much more in their Meged oil field.

Zion Oil & Gas, just to the north of Givot Olam, controls 327,000 acres of exploration territory and is in the final stages of drilling their fourth well, the Ma’anit-Joseph #3. In just weeks, Zion will be at its final depth of 19,000 feet.

With Israel’s recent gas discovery, the country is now staged to be natural gas independent (natural gas now powers some of Israel’s power plants and by the end of the decade, most likely, all electrical generation will come from natural gas fired plants). Noble Energy, one of the exploration partners on the gas discovery says they believe substantial oil reserves are under the gas fields.

Israel now has enough natural gas to supply its needs into the foreseeable future and for export. With the ongoing operations of Givot Olam, Zion Oil & Gas, Noble Energy can oil independence for Israel be far behind? I don’t think so.

What do you think?

Lebanon asks UN to guard gas from Israeli drilling

* Lebanon asks U.N. to prevent Israel tapping its reserves

* The two countries have no agreed maritime border

BEIRUT, Jan 4 (Reuters) – Lebanon has asked U.N. Secretary-General Ban Ki-moon to ensure that Israel’s plans to drill for gas in the Mediterranean do not encroach on its own offshore reserves, the National News Agency said on Tuesday.

It said Foreign Minister Ali al-Shami wrote to Ban asking him to “exert every possible effort to prevent Israel exploiting Lebanon’s maritime hydrocarbon resources which fall within its exclusive economic zone”.

Shami’s letter came a week after Texas-based Noble Energy (NBL.N:Quote) and its Israeli exploration partners said the Leviathan prospect — 130 km (80 miles) off the Israeli port of Haifa — was the world’s biggest deepwater gas find in the past decade. [ID:nLDE6BS10F]

Lebanon says that seismic surveys have identified promising quantities of natural gas in its own waters.

But Israel, which fought a month-long war with Lebanese group Hezbollah in 2006, has no agreed maritime border with Lebanon. Lebanese politicians say they fear Israel may drill in Lebanon’s waters or extract gas from common fields. Israel has said the gas falls within its own waters.

Shami stressed “Lebanon’s right to exploit fully its hydrocarbon resources, which fall within its exclusive economic zone, based on legitimate rights established by international law,” according to the news agency.

“Any Israeli exploitation of this resource would be a blatant violation of these laws and an attack on Lebanese sovereignty,” he added.

Spurred on by Israel’s plans to drill for gas, Lebanon’s parliament ratified a long-awaited energy law last August, which paves the way for exploration of offshore reserves.

But it still has a long way to go to catch up with Israel. It must identify blocs for exploration, supply data to interested investors, select bidders and have companies start work, while the Israelis already have firms drilling for gas. (Reporting by Dominic Evans; Editing by Jane Baird)

Zion Oil Reduces Warrant Price

Dallas, Texas and Caesarea, Israel – January 3, 2011: Zion Oil & Gas, Inc. (NASDAQ GM: ZN, ZNWAW) today announced that it has temporarily reduced the exercise price of its outstanding publicly traded warrants under the symbol ZNWAW (the “Warrants”) to $4.00 (from the $7.00 exercise price provided by the original terms of the Warrants) until 5:00 p.m. eastern time on March 7, 2011 (the “Expiration Time”). Any and all Warrants properly exercised in accordance with the terms of the Warrants prior to the Expiration Time will be accepted by Zion at the reduced exercise price and one share of registered common stock per Warrant will be issued to the exercising Warrant holder. After the Expiration Time, the $7.00 exercise price included in the original terms of the Warrants will be reinstituted. Except for the reduced exercise price of the Warrants prior to the Expiration Time, the terms of the Warrants remain unchanged. The reduced exercise price applies to all of Zion’s currently outstanding Warrants that publicly trade under the symbol ZNWAW. Holders of Warrants that desire to exercise their Warrants should contact their brokers and instruct them to exercise the Warrants prior to the Expiration Time.

As of today’s date, approximately 606,000 ZNWAW Warrants are outstanding. Zion’s common stock is listed on the NASDAQ GLOBAL Market under the symbol ZN and Zion’s Warrants being reduced are listed on the NASDAQ GLOBAL Market under the symbol ZNWAW. Zion recommends that Warrant holders obtain current market quotations for Zion’s securities before deciding whether or not to exercise their Warrants.

Richard Rinberg, CEO of Zion, stated, “We are pleased to offer our ZNWAW warrant holders the opportunity to exercise their warrants at a reduced exercise price of $4.00 and hope that a substantial number of these warrants will be exercised. We want to be fair to all of Zion’s investors and in addition to potentially raising a significant amount of capital for Zion, we believe that a reduction in the number of our outstanding warrants will simplify our capital structure and reduce the overhang of those warrants on the Company’s common stock”.

ZION’S BOARD OF DIRECTORS HAS APPROVED THE WARRANT EXERCISE PRICE REDUCTION. HOWEVER, NEITHER ZION NOR ANY OF ITS DIRECTORS, OFFICERS OR EMPLOYEES MAKES ANY RECOMMENDATION AS TO WHETHER TO EXERCISE WARRANTS. EACH HOLDER OF A WARRANT MUST MAKE ITS OWN DECISION AS TO WHETHER TO EXERCISE A WARRANT.

The information above does not constitute an offer to buy or exchange securities or constitute the solicitation of an offer to sell or exchange any securities in Zion.

Leviathan Discovery Opens a New Era for Israel

WASHINGTON, Dec. 29, 2010 /PRNewswire/ – David Wurmser, Ph.D., founder and executive member of the Delphi Global Analysis Group, LLC (Delphi), today issued the following statement regarding confimation of the Leviathan field offshore Israel as a major natural gas discovery with 16 Tcf of reserves. Delphi specializes in geopolitical risk analysis and mitigation, with a focus on energy development in Israel and throughout the Levant Basin.

“The Leviathan discovery opens a new era of natural gas development offshore Israel. Production of so large a quantity of gas relative to Israel will trigger major political changes. A resource of this magnitude will allow Israel to implement an energy policy that advances security, economic growth, and the environment. From power generation to desalination to transportation, the benefits of significant Israeli natural gas production promise to be profound,” said Dr. Wurmser.

“Israel is now positioned to become an exporter of natural gas. If encouraged by effective public policy, the fiscal, macroeconomic, and geo-strategic implications of developing offshore natural gas promise to rank among the most important advances in the history of the modern State of Israel.

“Accompanying a myriad of positive outcomes attached to Leviathan will be a series of serious political challenges. The temptation of excessive taxation and the internal battles over allocation of government revenue will intensify. Israel lacks energy-sector expertise and financing for large energy projects. Government officials have expressed concerns about concentrations of wealth and power in the hands of a few, as well as the impact of a stronger shekel on Israel’s export-driven economy. Policy makers, energy companies, and the financial community confront a complex and volatile political landscape,” concluded Dr. Wurmser.

Egyptian Gas Deals Threaten Tamar Exploration

JERUSALEM (AFP) December 14, 2010

Four Israeli firms have signed agreements to import Egyptian gas under a 20-year contract valued at between $5 billion and $10 billion, the Ampal-American Israel corporation said on Monday.

It said in a statement that Israel Chemicals, Dead Sea Works, Oil Refineries and OPC Rotem signed agreements to supply 1.4 billion cubic meters of gas over two decades, with an option to more than double that volume to 2.9 billion cubic meters.

The contract was signed with the Israeli-Egyptian East Mediterranean Gas, in which Ampal-American Israel Corporation has a 12.5% stake.

The gas supplies, which will fuel three private power plants, should start between the first and second quarters of next year, the statement said.

EMG has signed a number of agreements with Israeli firms since 2005, and the new contracts will boost the volume of Egyptian gas imports to 6 billion cubic meters worth $19 billion.

The Israeli business daily Globes said that the new contracts were a blow to companies involved in gas exploration in the Tamar fields off the port of Haifa in northern Israel, where reserves are estimated at 8 billion cubic meters.

The Texas-based Noble Energy is involved in that project.

Infrastructure Minister Uzi Landau on Sunday sent a letter to Prime Minister Benjamin Netanyahu warning that Israeli firms might give up on the Tamar field and instead turn to Egypt for gas supplies.

Landau said that the recent publication of a formal report recommending a sharp increase in royalties collected by the state on gas discoveries had created a “climate of uncertainty.”

The government-commissioned report recommends that royalties be nearly tripled to 60% once the companies involved in exploration and exploitation have recovered their initial investments.

Is there even more in Leviathan?

Leviathan will apparently be one of the largest natural gas discoveries in Israel.

29 November 10 16:26, Amiram Barkat

After the tough times he has recently gone through, Ratio Oil Exploration (1992) LP (TASE:RATI.L) CEO Yigal Landau had a more gentle moment this morning. After an extended period of quiet, Landau issued a notice to the press in response the discovery of signs of gas at Leviathan, and it began with “We were not surprised by the positive indications.”

Landau, as is often the case, expressed in words what many others were thinking.

We have gotten used to gas discoveries. They are already fully priced in at the stock exchange, as in the financial press.

And still, it must not be forgotten that Leviathan will apparently be one of the largest natural gas discoveries in Israel, and in its giant belly about $80 billion worth of gas has accumulated. This astronomical sum would have evaporated in an instant if a second scenario would have occurred last night, and signs of gas were not discovered. The chances of that were even, and throughout the dramatic night last night the negative scenario seemed the more likely, until almost the last minute.

Beyond that, it is important to remember the potential for a large oil discovery at Leviathan, even if the chances six to one against. A discovery like that would have far-reaching economic, strategic, and geo-political consequences for Israel and the entire region.

Published by Globes [online], Israel business news – www.globes-online.com – on November 29, 2010

Zion Oil Raises $18.25 Million

DALLAS and CAESAREA, Israel, Dec. 16, 2010 (GLOBE NEWSWIRE) – Zion Oil & Gas, Inc. (Nasdaq:ZN) announced today that on December 15, 2010, it completed its previously announced rights offering. The preliminary outcome of the rights offering, as of the close of business on December 15, 2010, indicates that subscriptions for approximately 3.65 million units, for gross proceeds of approximately $18.25 million, have been received (including over-subscriptions). All shareholders that requested over-subscription shares will be awarded their full over-subscription request.

Zion’s Chief Executive Officer Richard Rinberg said today, “I am pleased to announce the successful conclusion of our rights offering. The proceeds from this offering provide us with the funds that we believe are necessary to allow us to proceed with our planned drilling subsidiary, provide us with financial and operating flexibility and enable us to further our exploration and drilling program significantly.

“We have successfully drilled approximately two-thirds of our Ma’anit-Joseph #3 well and are now drilling the final third.

“We remain excited about the possibility of recovering hydrocarbons on our license and permit areas, onshore Israel, especially due to the U.S. Geological Survey report, published in April 2010, containing their assessment that there may be 1.7 billion barrels of recoverable oil and 122 trillion cubic feet of recoverable gas in the Levant Basin, as all of Zion’s exploration rights fall within the area of the Levant Basin.”

Under the completed rights offering, holders of record of Zion’s common stock were given non-transferable subscription rights to purchase eighteen (18) Units for every one hundred (100) shares of common stock owned as of the close of business on September 28, 2010. The purchase price of a Unit was $5. Each Unit consisted of one (1) share of Zion’s common stock and one (1) warrant to purchase an additional share of Zion’s common stock at an exercise price of $4.00.

Zion is currently drilling its Ma’anit-Joseph #3 well in Northern Israel and has currently reached a drilling depth of approximately 13,123 feet (4,000 meters). The Ma’anit-Joseph #3 well has targets in both the Triassic geological zone and the Permian geological zone. The primary target is Permian age lithology, expected at a depth of approximately 19,357 feet (5,900 meters).

For updates on the drilling activity please visit Zion’s website www.zionoil.com

Zion’s common stock trades on the NASDAQ Global Market under the symbol “ZN” and Zion’s $7 warrants trade under the symbol “ZNWAW”. From December 28, 2010 through their expiration date of December 31, 2012, Zion’s $4 warrants will trade on the NASDAQ Global Market under the symbol “ZNWAZ.” Zion’s transfer agent is in the process of distributing the share and warrant certificates to those rights holders who participated in the rights offering, either directly or through their brokers.

Zion Oil & Gas, a Delaware corporation, explores for oil and gas in Israel in areas located on-shore between Haifa and Tel Aviv. It currently holds two petroleum exploration licenses, the Joseph and the Asher-Menashe Licenses, between Netanya, in the south, and Haifa, in the north, covering a total of approximately 162,000 acres and the Issachar-Zebulun Permit Area, adjacent to and to the east of Zion’s Asher-Menashe license area, covering approximately 165,000 acres. Zion’s total petroleum exploration rights area is approximately 327,000 acres.

Iran to begin Lebanese offshore oil exploration

Jerusalem Post 11/02/2010 21:46
By AMIRAM BARKAT

Iranian Ambassador to Lebanon says Teheran to conduct a 3D seismic survey to map possible oil and natural gas-bearing structures.

The Iranian Labor News Agency quoted Roknabadi as saying, “Lebanon has [an] oil field shared with Israel. Threequarters of this field belongs to Lebanon and a quarter of the field belongs to the occupying regime [Israel],” “This country is about to exploit oil soon, but the Lebanese have not done anything in the field yet,” he added.

“Even when we expressed readiness to help the Lebanese in this field, the parliament of [Israel] voiced objection and said that Iran should not do this. But Lebanese officials have much welcomed our participation in oil exploration in this country.”

Lebanon has a delineation agreement with Cyprus. It hopes to start offshore gas and oil exploration in its waters by early 2012.

Israel’s Offshore Discoveries Fuel Tension

Russian news agency, Russia Today, reports on Israel’s recent oil and gas discoveries and international tensions with Lebanon over disputed territorial boundaries. Onshore, Russia Today, briefly reports on Givot Olam’s Rosh Ha’Ayin site but does not mention the Zion Oil & Gas exploration area or the Joseph Project.

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