Last week, Zion Oil conducted logging operations (gathering data inside the wellbore) down to a depth of 17,040 feet. Results from the logging operations will help Zion geologists determine if and where potential hydrocarbons exist in the well and how to proceed with drilling or possible production.
Below is a synopsis of last week’s efforts by Zion CEO Richard Rinberg:
An important part of our geological work during drilling is to continually examine the rock cuttings from the well bore (brought up to the surface by the circulating drilling mud) and match that physical evidence against the ‘expected’ rock cuttings. In our database of scientific information, we maintain a computer model of the expected rock strata.
As more information is gathered, the computer model is amended and in the event of a material difference between the ‘actual’ and the ‘expected’, it may be highly desirable to obtain further information by ‘logging’.
You may remember (from our previous logging) that the definition of ‘logging’ is: ‘to test and evaluate the well, using electrical wireline well logs’.
The ‘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.
Using state-of-the-art Baker Atlas logging equipment, we are able to obtain very high-quality data. This past week, we logged an interval of approximately 500 meters; from a depth of approximately 4,825 meters down to approximately 5,325 meters.
The logging will enable us to make decisions based on scientific evaluation rather than hunches and guesstimates.
So, this past week, we are still at a depth of approximately 17,470 feet (5,325 meters), close to our final target of approximately 18,040 feet (5,500 meters).
Zion Chairman John Brown, CEO Richard Rinberg and company President Glen Perry got the NASDAQ market going on Wednesday by ringing the opening bell. The ‘opening bell’ ceremony signified the first day of trading for Zion Oil & Gas on the NASDAQ market under the ticker symbol ‘ZN’.
Zion has demonstrated that they can compete in the global financial market by continuing to hold their stock value and raise significant capital in the midst of the worst financial melt down since the Great Depression. In short, people believe in Zion Oil and the financial world has taken notice.
About Zion Oil & Gas, Inc. (ZN):
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.
About NASDAQ OMX:
The NASDAQ OMX Group, Inc. is the world’s largest exchange company. It delivers trading, exchange technology and public company services across six continents, with over 3,900 listed companies. NASDAQ OMX Group offers multiple capital raising solutions to companies around the globe, including its U.S. listings market; NASDAQ OMX Nordic, NASDAQ OMX Baltic, including First North; and the U.S. 144A sector. The company offers trading across multiple asset classes including equities, derivatives, debt, commodities, structured products and ETFs.
NASDAQ OMX Group technology supports the operations of over 70 exchanges, clearing organizations and central securities depositories in more than 50 countries. NASDAQ OMX Nordic and NASDAQ OMX Baltic are not legal entities but describe the common offering from NASDAQ OMX Group exchanges in Helsinki, Copenhagen, Stockholm, Iceland, Tallinn, Riga, and Vilnius. For more information about NASDAQ OMX, visit http://www.nasdaqomx.com.
It is correct that we have refrained from releasing ‘raw data’ (and will continue to do so) because we will not release information until it has been properly and professionally evaluated and confirmed.
When we drilled the Ma’anit #1 well, we posted daily drilling reports, but as our stock is now publicly traded, we cannot make such information available without proper review. This would be a daily burden on management time and add a large extra cost for external consulting and the required public filings.
In previous emails, we noted that the procedure is first to drill and then to ‘appraise and evaluate’ using electrical wireline well logs.
We plan to finish the intermediate drilling phase soon and then to log the well. We will be using some state-of-the-art Baker Atlas logging equipment, including some of the following:
Caliper Log, Compensated Neutron Log, Compensated Densilog, Gamma Ray Log, High Definition Induction Log, Formation Resistivity Imager (STAR), Circumferential Borehole Imaging Log (CIBL) and the Hexagonal Diplog.
Thank you for your patience and you can be sure that when we do release information, it will be as correct as we can possibly make it.”
As promised, here is Zion’s first progress report on the drilling of the Ma’anit Rehoboth #2.
Here is a progress report (#1) regarding the drilling operations, for the 30 days ended Friday, May 15, 2009, from Zion’s President and Chief Operating Officer, Glen Perry:
The drilling operations of the Ma’anit-Rehoboth #2 well can be divided into eight distinct steps:
(2) The setting of a cement plug to allow the hole to be deviated.
(3) ‘Kicking off’ of the plug and establishing both the angle and direction of the deviation.
(4) Drilling directionally into the Triassic formation, a depth of approximately 15,400 feet (4,750 meters).
(5) Appraisal and evaluation of the Triassic formation using electrical wireline well logs.
(6) Setting and cementing casing at that depth.
(7) Drilling deeper to the Permian formation, a depth of approximately 18,000 feet (5,500 meters).
(8) Appraisal and evaluation of the Permian formation using electrical wireline well logs.
During the period covered by this report, we completed steps (1), (2) and (3).
On Friday, May 15, 2009, we went into the hole with directional tools, in order to start the directional drilling operations.
The rig has been operating on a 24 hour basis, utilizing two drilling crews on 12 hour shifts. To date, the work has gone well, with few problems encountered. We are ‘on schedule’.
The members of the Turkish rig crew have been pleasantly surprised with the courteous and helpful attitude that they have received from everyone they have met in Israel. As a direct consequence, their attitude is very positive and they want to do a ‘first class’ job for Zion.
Anyone who was a stockholder on the record date of May 4, 2009, has the right to purchase some more Zion stock at $5.00 per share of stock.
If you are a stockholder, I hope you will exercise your rights to purchase Zion stock at $5.00 and even consider an over-subscription, as I believe we have arrived at the most exciting stage of Zion’s development and that the offer before you may well never be repeated.
The rights offering is set to expire on June 10, 2009, although we may, at our discretion, extend that expiration date.
Psalm 51:18 – In your good pleasure, make Zion prosper…
Thank you for your continued support of Zion, and
Shalom from Israel
CEO of Zion Oil & Gas, Inc.
Zion Oil & Gas announced yesterday that drilling operations have begun at the Ma’anit Rehoboth #2 well site.
Zion will drill down to a depth of 15,400 feet (Triassic), where the Ma’anit #1 was forced to quit in 2005, and then plans to increase to a final depth of more than 18,000, into the Permian, where most of the world’s oil reserves has been discovered.
Drilling operations will run 24 hours a day in 12 hour shifts, operated by the AME (Turkey) drilling crew.
AME’s 2,000 horsepower drilling is twice the size as the Lapidoth rig used on Zion’s Ma’anit #1 in 2005. The mechanical issues due to rig capacity in 2005 should not be a problem during the Ma’anit Rehoboth #2 well, using the new AME rig.
Even with the new rig, drilling can be slow and expensive. According to Zion COO and President Glen Perry, “Due to the depth and slow bit penetration rates, dry hole drilling costs per well are estimated to be between $7 million and $9.5 million. Completed well costs are estimated to be between $9 million and $11 million.”
The name “Rehoboth” was chosen for the new well from scripture after the decision to abandon the Ma’anit #1 due to mechanical problems. “He moved on from there and dug another well, and no one quarreled over it. He named it Rehoboth, saying, ‘Now the Lord has given us room (Rehoboth means room) and we will flourish in the land.'” (Genesis 26:22)
Below is a gallery of shots taken from the Ma’anit Rehoboth #2 well site.
Last month Delek-Noble an energy exploration partnership, announced a massive natural gas discovery off Israel’s northern coast. According to reports, they may have enough natural gas to supply Israel’s needs for fifteen years.
In the energy exploration world it’s generally understood that where you find gas, you find oil and vice-versa. Zion Oil and Gas, founded by John Brown received its first onshore exploration license in 2000. Brown came to Israel in the 1980’s with the belief that a massive oil discovery for Israel was predicted in the pages of the Bible. With nothing but his Bible and his faith John Brown began his quest for Israel’s oil. The company now holds 162,000 acres under license in Northern Israel and is planning to drill its second well next month.
Last week I asked Zion CEO Richard Rinberg if Delek-Noble’s recent offshore discovery affects Zion’s chances of discovering oil and gas onshore, how the current world economy is playing into their exploration efforts and about Zion’s drilling plan.
Steve Spillman: Delek and Noble Energy announced a massive natural gas discovery off the coast of Haifa earlier this month. How has this news affected the optimism of Israel’s citizens about the country’s energy future? How has it affected optimism for onshore oil and gas exploration?
Richard Rinberg: Due to the size of the offshore discovery, there’s little doubt that optimism in oil and gas exploration, both offshore and onshore, has increased.
At Zion Oil we are delighted, as this discovery is very good for Israel and we believe validates our belief that significant oil and gas reserves can be found in Israel.
The discovery also reinforces the decision by the Government of Israel to continue building the gas pipeline infrastructure and electric generating plants powered by natural gas.
Due to the high cost of developing this new field, surprisingly, the result may well be higher gas prices.
For years, the Israel Electric Company (IEC) has purchased gas at prices below the normal international market price. But with declining production from the Yam Tethy’s field, their reliance on natural gas to power five generating plants (with two more under construction), and the uncertainty of Egyptian supply, IEC may no longer be in a position to ensure that the price that they pay for natural gas is below normal international market prices. If the price isn’t reasonable, then the owners of the new discovery can export their produced gas.
We believe that the market will be able to absorb any new gas finds and, as a result of this discovery, any natural gas that Zion may discover and produce could be worth more than estimated before this discovery.
SS: Do you think this discovery may have any direct relevance to what you expect to find in the Joseph and Asher license areas?
RR: There is no direct relevance to our exploration in terms of a continuation in a geological structure. Our expectation is unchanged – we are still very optimistic.
SS: The world economy has been pretty shaken up over the past several months. Oil prices have plummeted. How do the world economic situation and oil prices affect Zion’s exploration plans?
RR: In 2008, we implemented a $10-unit public offering and raised over $6.4 million in cash, in order to fund our drilling plans in Israel. The offering was certainly a success, but we were hoping to gather significantly more funds than we did. The world financial crisis had its negative effect on us, just as on everyone else.
Perhaps surprising to the person in the street, the fall in the price of oil is actually good for Zion’s drilling plans, as we will have cost savings of $500,000 to $700,000 as a result of lower shipping and transport costs and lower fuel costs during drilling. We are very happy to ‘suffer’ a low oil price during our drilling operations.
Of course, at a later stage… well let’s save that for another day.
SS: The Dow Jones Industrial Average has lost about forty percent of its value in the last year. Other world markets, including Israel’s have fared the same or worse. Zion just completed a public follow-on offering in which it raised more than $6.6 million and even though the company has yet to produce any oil; its stock value is higher now than when the company first went public. How do you account for a successful public offering and Zion’s stock value in the middle of the current economic meltdown?
RR: There are a number of different answers I could give, but perhaps the truth is ‘all of the answers, at the same time’.
Everyone who works at Zion believes in the uniqueness of our company and our goal to help Israel by finding oil and gas, onshore in Israel. I believe that the vast majority of our stockholders also recognize that Zion is not just another company. They purchased the stock to support our work and hold; it’s not just another trade.
Simply put, those who work at Zion or support Zion by owning stock have faith that all will eventually work out, in the Lord’s good time. Those who hold the stock just don’t want to let it go.
From a business standpoint, our goal is to build value into the company and, of course, success with our exploration work would inevitably be reflected by a higher stock price.
SS: Zion has contracted with the Turkish oil drilling company AME, for a 2,000 horsepower drilling rig. AME’s rig is bigger – can go deeper than any drilling rig currently available in Israel. My understanding is that the Israeli rig Zion used to drill the Ma’anit #1 well in 2005 wasn’t mechanically able to reach a depth beyond 15,500 feet. And it’s your opinion that the Ma’anit #1 failed to produce simply because the well wasn’t deep enough. Is that correct?
RR: We drilled the Ma’anit #1 well to a depth of 15,842 feet, to the Triassic formation, with encouraging results. However, due to the mechanical condition of the well-bore, in June 2007, we decide to abandon the well. The well failed to produce due to mechanical problems and not, we believe, because of the absence of oil and gas.
You are correct that the rig that we used back then was not capable of drilling any deeper than we actually did.
The whole reason for bringing a 2,000 horsepower rig into Israel is to enable us to ‘explore the deep’ and drill down to the Permian geological formation.
This time we have all the extensive knowledge gained during the drilling of the Ma’anit #1 well, so we are better prepared to deal with the mechanical problems than before.
SS: When is the AME rig expected to arrive at the Ma’anit Rehoboth #2 site? When do you expect to be drilling?
RR: We currently expect the drilling rig to arrive in Israel, rig-up and commence drilling in March 2009.
SS: Is the $6.6 million Zion raised in the follow-on offering enough to complete the project?
RR: Oil and gas exploration is a very expensive business and our project has much work ahead of it. There are many wells to be drilled on our license areas. So, we will proceed with our operational work, while at the same time keeping a weather eye on our cash reserves. At some stage, we hope and believe, Zion will become (very) cash-positive.
SS: What are Zion’s exploration plans beyond the Ma’anit Rehoboth #2 well?
RR: We are already planning our third well, the Elijah #3 well and have further plans that are, as yet, not in the public domain, so we cannot discuss them at present.
SS: Zion’s mission is to produce oil and gas in Israel. A major oil discovery in Israel will certainly have a significant economic impact on the country. Do you think the implications of Zion Oil & Gas accomplishing its mission will reach beyond economics?
RR: Without a doubt. Zion’s Founder and Chairman, John Brown, came to this project due to an idea planted in his mind by your father, Jim Spillman, and his book. John became convinced that the Holy Bible contained clear references to oil in Israel and the location where that oil may be found.
Over a number of years, John gathered a group of geologists and oil and gas professionals together, including Zion’s President and Chief Operating Officer, Glen Perry. Glen is an oil and gas professional who will readily tell you that this project is the most exciting he has ever been involved with in his long and successful career.
With success, John will say “See, the Book is true!” And for those who hear Zion’s story, there will certainly be much contemplation that something truly historical has occurred – perhaps even a spiritual awakening and the dawning of a new age.
Israeli energy stocks surged today (see http://www.oilinisrael.net/oil-in-israel-articles/israel-energy-stocks-surge-on-large-gas-find)based on Noble Energy’s announcement of a discovery off the Haifa Coast of over three trillion cubic feet of natural gas.
Noble Energy (NBL, NYSE) who announced the discovery and Zion Oil (ZN, AMEX), both public companies trading on American Markets, and both involved in Israeli energy exploration, should experience similar stock surges on Monday when US markets open.
Zion Oil & Gas CEO Richard Rinberg contributed these shots of Glen Perry inspecting the AME rig in Ankara, Turkey before disassembly for shipment to the Ma’anit-Rehoboth #2 well site in Northern Israel.
Caesarea, Israel – September 15, 2008 – Zion Oil & Gas, Inc. (Amex: ZN) of Dallas, Texas and Caesarea, Israel announced today that it and Aladdin Middle East (“AME”) have signed a drilling contract. Last week, Zion’s Chief Executive Officer, Richard Rinberg, and the President and Chief Operating Officer of Zion, Glen Perry, visited AME’s offices in Ankara, Turkey, in order to inspect AME’s rig and equipment yard, meet with key AME personnel and finalize the terms of the drilling contract.
The contract was executed by both parties on September 12, 2008. Under the terms of the contract AME has committed to provide a completely refurbished and updated 2,000 horsepower rig and crews (anticipated to arrive in Israel in November 2008) and to drill Zion’s planned Ma’anit-Rehoboth #2 well ‘directionally’ to below 18,000 feet. The well is planned to appraise the strong shows seen in the Triassic (during the drilling of the Ma’anit #1 well) and to drill deeper into the Permian formation. It will be the first well drilled to the Permian in Northern Israel. The commencement of the drilling program is subject to receipt of various government permits and raising additional capital, whether through Zion’s current public offering or otherwise.
Richard Rinberg, Zion’s Chief Executive Officer, said today, “This is an important milestone for Zion, one which we have been working towards for a long time. We are very impressed by the quality of AME’s rig and the professionalism of their people. We appreciate the hospitality shown to us by AME during our visit and are excited about working with AME and drilling our next wells, just as soon as we can.
Additional information relating to the drilling contract and related matters will be included in Zion’s Current Report on Form 8-K, that Zion will be filing soon with the Securities and Exchange Commission.
Zion Oil & Gas, a Delaware corporation, explores for oil and gas in Israel in areas located onshore between Tel-Aviv and Haifa. It currently holds two petroleum exploration licenses, the Joseph and Asher-Menashe Licenses, between Netanya on the south and Haifa on the north covering a total of approximately 162,000 acres.
AME is an independent oil and gas exploration and production company, incorporated in Delaware in 1962, with its head office in Wichita, Kansas. AME has drilled more than 130 exploration and development wells in Turkey for major oil companies, including Exxon, Mobil, Wintershall AG, MOL, Placid Oil, Neste Oy, Terralliance (USA), JKX (UK) and TETHYS (Sweden). Its rig inventory includes 11 drilling and workover rigs and AME’s personnel have enormous work experience in many countries, including Turkey, Bulgaria, Azerbaijan, Kazakhstan, Turkmenistan and Georgia.