Zion Oil Releases New Exploration Map

Zion Oil & Gas, Inc. released an updated map of it’s current and applied for exploration area. Updates include splitting Zion’s former ‘Issachar-Zebulun’ permit area into two new (applied for) areas – the ‘Zebulun Permit’ and the ‘Jordan Valley’ license. Surprisingly, Zion has also applied for an exploration license near the Dead Sea in the same area where Ginko/Lapidoth discovered oil in 2006.

According to Israel’s Petroleum Law, an exploration permit cannot exceed 18 months and allows the permit holder to conduct preliminary investigations, but not drill in the permit area. An exploration license is granted for three years and can be extended another four years. Licensees are required to drill test wells in the license area. An exploration license may not exceed 400,000 dunams (approximately 100,000 acres) in area.

Zion Oil Concludes Field Seismic Acquisition

Zion Oil & Gas has successfully concluded acquisition of field seismic in both their Asher-Menashe License and Issachar-Zebulun Permit areas. The raw data is now being processed for interpretation, both in Israel and in Houston, Texas.

On June 16, 2010, field acquisition of new 2-dimensional seismic in the Jordan River Valley section of Zion’s Issachar-Zebulun permit area was successfully concluded.  Approximately 30 km of new seismic data was collected on Zion’s behalf by the Geophysical Institute of Israel (GII).

According to Zion CEO Richard Rinberg, “I am pleased to report that the data acquired does seem to be of good quality. This was not easy to achieve, as in the Asher-Menashe license area, there are some major roads. One night, we arranged for the police to stop the flow of traffic, so that the traffic ‘noise’ would not affect the seismic acquisition.

“Even with the latest computer technology, the data processing will take a number of weeks to produce results and then the resulting information will need to be carefully built into our geologic computer model by Zion’s geologists. As a result, we should be able to have a much better picture of any geologic structures under our exploration areas and therefore make better decisions regarding our future exploration plans.”

This data is now being “processed” by a geophysical consultant in the United States into usable graphic imagery that can then be “interpreted” by Zion geologists in their investigation for future drilling prospects.  The processing and interpretation of this data is expected to be finalized by October 2010.

‘Field seismic’ or ‘seismic reflection’, according to Wikipedia, is a method of exploration geophysics that uses the principles of seismology to estimate the properties of the Earth’s subsurface from reflected seismic waves. The method requires a controlled seismic source of energy, in this case, trucks equipped with seismic vibrators, commonly known by the trademark name Vibroseis. By noting the time it takes for a reflection to arrive at a receiver, it is possible to estimate the depth of the feature that generated the reflection. In this way, reflection seismology is similar to sonar and echolocation.

Zion Oil & Gas and other exploration companies use this seismic reflection technology to ‘see’ possible hydrocarbon bearing structures below the earth’s surface by ‘interpreting’ the reflected seismic data.

Zion Oil Jan 15 Update

Zion Oil & Gas Newsletter

January 15, 2010

Dear Shareholder and/or Friend of Zion…

There has been quite some discussion by our staff regarding Zion’s weekly updates, as not every week contains ‘news to report’ on every part of our exploration license and permit areas.

The general feeling was that if there is nothing new to report then we should simply state that fact. There will be weeks with much to report and there will be weeks with little to nothing new to report.

Turning to the Book of Ecclesiastes (1:9-10), there is the well known comment:
What has been will be again, what has been done will be done again; there is nothing new under the sun.

Is there anything of which one can say, “Look! This is something new”? It was here already, long ago; it was here before our time.
So, I am not going to continually repeat information that has already been sent to you. Where there is ‘no news to report this week’, I will write just that. But you can be certain that we are doing our best to move Zion’s exploration program forward… every day of every week.

This past week, Zion’s Founder and Chairman, John Brown, visited Israel together with Bill Ottaviani, a Petroleum Engineer who spent 25 years (1982 to 2007) working for Chevron Corporation in various countries and then two years (2007-2009) as Chief Operating Officer of Rex Energy, helping to build up Rex Energy in the USA. John Brown invited Bill Ottaviani to visit Israel as a prospective candidate for Zion’s Board and to review our operations and help advise us regarding some of the recommendations currently under technical evaluation.

Also, this week, we were visited by a team from ‘Halman-Aldubi Group’ one of Israel’s leading institutional Investment Management groups. Halman-Aldubi is the only company in Israel that deals with the management of provident funds on behalf of the public and is completely independent.

There was some Israeli Oil & Gas news released in Israel, this week. On Wednesday, January 13, 2010, the Jerusalem Post noted that Prime Minister Binyamin Netanyahu has ordered work to begin, this month, on a natural gas pipeline that will run from Dor Beach, south of Haifa, up to the oil refineries in Haifa. The significance of the Israeli government continuing to build the onshore natural gas pipeline infrastructure is that, in the event that we are successful in finding and producing commercial quantities of natural gas, the supply and distribution of that natural gas should be possible through the onshore pipeline system.

Here is this week’s operations update.

Drilling Operations at the Elijah #3 Well

The Elijah #3 site L to R: Bill Ottaviani, Richard Rinberg (Zion’s CEO), John Brown (Zion’s Founder and Chairman), Eyal Shuker (Investment Manager at Halman-Aldubi), Sandra Green (Zion’s CFO) and two analysts from Halman-Aldubi

The Elijah #3 well has been cased from the surface down to 6,706 feet (2,044 meters).

For the period from ‘spudding’ the well (that is ‘beginning drilling operations’) to December 31, 2009, we drilled to a depth of approximately 9,186 feet (2,800 meters), at an average rate of penetration of approximately 131 feet (40 meters) per day.

As of this morning, the Elijah #3 well has been drilled to a depth of approximately 10,938 feet (3,334 meters).

Both last week and this week, we have been drilling in the Asher Volcanic Complex, composed of tuffs, weathered basalts, non-weathered basalts, red shales and red and tan mudstones.

The Ma’anit-Rehoboth #2 Well

The Ma’anit-Rehoboth #2 Well Site, showing the well head
No additional news to report this week.

The Ma’anit-Rehoboth #2 well was drilled to a depth of 17,913 feet (5,460 meters). The well penetrated a number of geologic formations that have been preliminarily deemed to have hydrocarbon potential and we retrieved a small quantity of crude oil. We are awaiting analysis of that oil and are evaluating recommendations by our engineering staff regarding further testing and possible completion procedures.

The Issachar-Zebulun Permit Area

No additional news to report this week.

We have been reprocessing all of the existing seismic and are planning to acquire, in March 2010, approximately 30 kilometers of field seismic, in the permit area.

Finally, I’ll note that we have begun preliminary discussions with Aladdin Middle East Ltd regarding the drilling of an additional well, in order to progress and implement our multi-well program.
“In your good pleasure, make Zion prosper…”
Psalm 51:18
Thank you for your support of Zion, and

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, geophysical and geological data and interpretation, anticipated attributes of geological strata being drilled, drilling efforts and locations, the presence or recoverability of hydrocarbons, timing and potential results thereof and plans contingent thereon and rights offering 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.

Contact Information

More information about Zion is available at www.zionoil.com or by contacting Michael Williams at Zion Oil & Gas, Inc., 6510 Abrams Rd., Suite 300, Dallas, TX 75231; telephone 1-214-221-4610; email: dallas@zionoil.comhone: 1-888-891-9466