Drilling Complete on Ma’anit-Rehoboth #2

September 18, 2009 by  

Zion Oil CEO Richard Rinberg announced to shareholders today in his weekly drilling update that drilling of the Ma’anit-Rehoboth #2 well has been completed at 17,913 feet; 131 feet short of its intended target depth. From company reports, it still isn’t clear whether or not the bottom of the Ma’anit-Rehoboth #2 is in an upper Permian or lower Triassic stratum.

Rinberg stated that, “There were a number of factors that influenced our decision not to drill deeper.” But the only factor he gave stockholders was the increased risk of loosing the well from a cave-in due to a long section of ‘open hole’ (uncased) at the bottom of the well. Given the fact that the distance between the drill bit and the motor was nearly 3.4 miles, losing the well due to a cave-in or other catastrophic failure is a very real concern. Whatever the other factors influencing the decision to stop drilling were, they weren’t stated by Rinberg – so we’ll have to leave any other reasons to speculation.

Speculation, however, is something Zion’s managers can’t do – at least not publicly. Because the company is publicly held and in the process of another stock offering, SEC regulations prohibit Zion’s management from any form of public ‘speculation’ that could be construed as an attempt to paint a picture of the company’s future prospects in way that might not be a 100% factual projection at the moment. The SEC calls these “Forward Looking Statements”. That means Zion’s management is pretty much limited to telling us what they ‘know’ they’ve got in the Ma’anit-Rehoboth #2 well and not what they ‘think’ they’ve got. Which, at this point, doesn’t make for much news.

So if you’re going to draw conclusions, you can draw some of them from what’s not said :

  1. The Ma’anit Rehoboth #2 isn’t a gusher (“Gusher” is an old term for a self pressurized free-flowing oil well). If oil was flowing out of the top of the well, it would be a fact, not a “Forward Looking Statement.” Zion shareholders (and the rest of the world) would know about it.
  2. There’s no definite agreement as to whether or not the bottom of the Ma’anit-Rehoboth #2 is in the Permian.
  3. The Ma’anit Rehoboth #2 hasn’t suffered any sort of catastrophic failure. As sparing as Zion’s management has been with potential good news, to their credit, they’ve always been forthcoming in reporting any bad news. If any sort of trend can be discerned, as far as Zion is concerned, no news is more likely good news than bad … or simply, no news.
  4. If you follow the general energy exploration news coming out of Israel as closely as I do (that’s pretty close), then you may have discerned by now that Israel is in the beginnings of an energy ‘gold -rush’. The HUGE natural gas discovery off the Haifa coast has insured Israel’s energy (gas and electric) needs in the foreseeable future. Givot Olam has reported, and the state of Israel has accepted, that they have nearly a billion barrels of oil under the ground just south of Zion’s license area; they just haven’t been able to get it to the surface yet (by the way – they’re drilling as I write).  Oil discoveries in the Dead Sea region (not huge, but there) are being reported and same companies involved in the off shore discovery are now buying into the Dead Sea exploration. Translation: Oil and gas discoveries in Israel aren’t a future possibility, they’re a present reality.

Now let’s draw some conclusions from what has been said:

  1. The Ma’anit-Rehoboth #2 well is at 17,913 feet (2071 feet deeper than the Ma’anit #1).
  2. Their are “seven zones that warrant completion testing” (I can’t locate documentation, but I believe there were three to five “zones that warranted testing” in the Ma’anit #1).
  3. What’s been concluded is the “drilling phase”. The determination as to whether or not the well will produce commercial hydrocarbons comes in the “completion phase.”
  4. The rig will soon be moved to the next drilling site, at the ‘foot of Asher.’ Zion Oil & Gas is a professional oil exploration company with multiple leases and multiple drilling prospects in the nation of Israel. Zion Oil is not a ‘one hole wildcatter.’ There is absolutely no reason to give up on the Ma’anit-Rehoboth #2 at this point, the well hasn’t even been tested yet. But regardless of how much or how little oil and/or gas the Ma’anit-Rehoboth #2 produces, Zion will continue drilling for oil and gas in northern Israel.

Now let’s look at the big picture:

  1. Zion Oil owns most of the exploration license area in northern Israel – 327,000 acres.
  2. The Ma’anit-Rehoboth #2 is among the deepest wells ever drilled, in one of the most promising locations, drilled with the best equipment, manned by the most adept crew, tested with the most sophisticated equipment that onshore Israel has ever seen. That’s not hyperbole, it’s fact.
  3. Geology and recent experience have proven – natural gas and oil lie beneath the land (and offshore) of Israel.
  4. If you want big picture, here’s the biggest – Zion Oil, Noble Energy, Delek, Givot Olam and the rest didn’t promise Israel’s children “The blessings of the deep that lies beneath.” Israel’s God did (Genesis 49:25). From where I sit, it looks like He’s keeping His promise. We’ll find out more about the Ma’anit-Rehoboth specifically as Zion begins their “completion phase”.
  5. Just as a reminder, I’ve dug up a photo taken at the Ma’anit #1 in 2005. That’s a hydrocarbon flare from the well – it’s down there.

Ma'anit Flare

Keep the faith.

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Comments

17 Responses to “Drilling Complete on Ma’anit-Rehoboth #2”

  1. Bob Sanders on September 19th, 2009 4:06 am

    WOULD YOU PLEASE EXPLAIN WHAT IS MENT WHEN YOU REFER TO THE COMPLETION PHASE AND HOW LONG WILL THIS PHASE TAKE. THANKS FOR THESE REPORTS . ALSO WHEN WILL WE BE ABEL TO BUY INTO THE NEW WRIGHTS OFFERING BOB.

  2. Dr. Martin Halpern on September 19th, 2009 7:38 am

    Steve – you appear to have enough faith for all of us. As an exploration geolgist that has worked in Israel, I fully appreciate the ‘risks’ [and possible rewards] in drilling potential carbonate reservoirs.
    HAG ROSH HASHANA SAMEATH!

  3. Mike Steindorf on September 19th, 2009 7:39 am

    Dear Mr. Rinberg,
    Thank you for the information that you sent to all Zion stockholders.
    I am wondering what size (diameter) casing string or liner Zion will be running at the current total depth in order to safely test the prospective zones you mentioned. And, will plans include the possibility of deepening later to the original proposed total depth of 18040 to see the Permian? I believe in what Zion is doing to find oil for Israel and I am so grateful to all the Zion people for their collective commitment. My faith is in G_d’s promises.
    Thank you,
    Mike Steindorf

  4. Rainman19 on September 19th, 2009 9:18 am

    Once again one has to read between the lines. Interesting to note that they announced the seven zones of interest back when the drill rig was still at the 17470 foot level, and still in the suspected cap rock, so one could conclude that the zones of interest mentioned were located in the Triassic. However, the number one goal of this well is to test the Permian of Northern Israel. With that in mind, my first guess is that the cap rock extends from the 17140 foot level down to the 17540 foot level (400 feet). My second guess is that they entered the Permian at the 17540 foot level and followed it down tho the 17913 foot level where the suspected increase in drilling speed created some excitement along with some concern. My third guess, and probably the most exciting speculation, is that they’re talking about resistivity logs because something besides drilling mud has entered the well bore. jmho

  5. Warren Smith on September 20th, 2009 8:18 am

    I appreciate your objective breakdown of Zion’s Sep 18th update. I share the Big Picture view that deep well drilling capabilities are today uncovering hydrocarbon deposits in several locations, including Israel.

    And so, expecting the drilling at all Zion sites to eventually confirm that oil/gas/both are down there, I would like to hear details on how Zion transitions from exploration to production. I.e. Does Zion Oil have plans( inclusive of right people, Right equiptment, adequate capital) in readiness for this contingency?

    There was in the past one ZN mention that Maanit-Rehoboth #2 site lies conveniently near an Israeli pipeline that would allow for payoff resource to flow quickly to market. But since then, all details have been below ground focused.

    I remain patient that ZN will be economically successful, and have full confidence in the management and technical teams to make this a reality in due course. And, more importantly, I too believe that G_d’s promises can be trusted literally here.

  6. dean staples on September 21st, 2009 11:12 am

    Steve, I just read your analysis of the Maanit Rehoboth well #2 and I want to ask a couple questions of you. First of all,I agree with all the in between the lines comments you advanced. I wish Zion could be a little more forthcoming as to what they have found so far. If it weren’t for your excellent side commentaries, I would have many more doubts than I do at present. I believe the ZION team used due prudence to get out of there when they did. I was quite concerned that they were sitting in an open hole for one month. I kept saying to myself, this is not good. So when I heard they anounced to stop drilling at 17,940 ft. I was relieved. I personally feel that the closer they get to the ocean the easier the finds will be. Strictly a gut feel. The closer they get to TAMAR the better. Here are a couple questions. If Israel gets into a shoot out with Iran, will the team have to stop operations? If Givot has located one billion barrells,why can.t they get it to the surface? I haven’t given up on Maanit #2 because I realize that a GUSHER is a rare well and that much testing has to be done in order to know how and where to mproceed with the well. I believe we are already seeing Genesis 49 being opened up before our very eyes due to the TAMAR find. I do believe the GOLD RUSH is on and I have a lot of confidence in the ZION team. I am glad GOD put the formula in code because if HE didn’t all the MAJORS would be sucking up the CHILDREN of ISRAEL”S blessings. Upward and Onward,Investor in Eliot, Maine

  7. Denny on September 23rd, 2009 3:17 pm

    If there had been a mechanical failure of the well on the way down to 18K ft. from 17.5K ft., would that have meant they would have to abandon the well or would they still be able to check out the 7 areas of interest and if productive, be able to extract whatever is down there?

  8. Nick on September 25th, 2009 9:44 am

    Thanks !! GOD BLESS ZION OIL & GAS!!!!!!

    Im wondering where is Elijah #3 well located at? Is it near Elijah #1 & 2 wells?

    Thank you
    Nick.

  9. admin on September 30th, 2009 11:28 am

    There hasn’t been any news of a mechanical failure, in fact, Zion elected to stop drilling at their current depth to avoid any chance of a mechanical failure. They’re simply at the end of the drilling phase and the beginning of the development phase. There’s no intention of ‘abandoning the well’; they’re not finished yet. The development phase determines what is commercially producible in the seven ‘areas of interest.’

  10. WGMJR on September 30th, 2009 12:30 pm

    Elijah #3 is at Ein Carmel. Closer to the coast… and Haifa.

  11. dean staples on October 6th, 2009 5:14 am

    I find it most interesting that many of the talkbackers here are not referring to the Ezekiel 38 old testament prophecy of Russia coming down into Israel to take a spoil. I read an excellent New York Post article by retired Army Colonel Ralph Peters yesterday that claims Russia is oil starved at present. Because they have an alliance with Iran, the two are pretty much inseparable should it come down to protec ting the oil fields of the Persian Gulf region. Iran wants to conquer the Jews and Russia wants the oil. Should Israel attack Iran the price of oil could go off the charts, especially if Russia and Iran shut down the Persian Gulf export movements. The hungrier and more confident the Bear becomes,Israel starts to look more inviting to the coalition of bad guys. I believe the Tamar gas find is the first real busting open of the Genesis 49 and Deut.33 prophecy of oil in Israel. Not only that,but it could very well be the busting open of the beginnings of Ezekiel 38. Putin is a real chess player and so is Mahmood Ahmodinnerjihad. These two c ertainly are the ones God had in mind when He wrote the prophecy 2500 years ago. So this kind of brings into focus the times in which we find ourselves alive. Zion Oil is drilling very, very close to the Tamar find. I think they would have to be real bad shots to miss what God foretold in the prophecies. Israel may need all the oil they can get if they bomb Iran. More than likely the Big Bear will pounce on Saudi Arabia and the U>S> under Obam won’t know what to do except gasp in horror. So, God has left that last day oil deposit to strenghten Israel in a time of need. Anyone else care to speculate? Investor and believer in Eliot, Maine.

  12. Lyndon on October 6th, 2009 11:06 am

    Dean, you have a very good point. The issue of the gas and oil discoveries (the honey) attracting the Russian bear down to Israel to take a spoil is one that hangs on my mind. It may take some time though, since these discoveries will take time to find and identify in its entirety, to get out of the ground, to get to the market, to enrich Israel, and to work through the system. It may take several months to a few years. But the more pressing issue facing Israel is Iran’s ability to make and deliver a functional atomic weapon, which seems only a few months away. Most assume Israel will attack Iran, which certainly could happen. But several years ago, I posed the question to Hal Lindsey during an appearance on Joseph Farah’s internet radio show: Why is Syria not named as one of the countries participating in the Magog Invasion? Syria has participated in every major war against Israel since 1948. Could this suggest that Isaiah 17 verse 1 will be literally fulfilled before the Magog Invasion? If this scenario is possible, then we should also be paying attention to the possibility that Israel and Syria may have a conflict that gets out of hand. And after the nuke goes off and Damascus is no longer a city, there will likely be a very strong international call for peace and nuclear disarmament. This is already happening as we speak, and will likely gain irresistable momentum after this nuclear calamity. During this time, Iran and Israel may be forced by tremendous international pressure and international reassurances of peace to end their nuclear programs and disarm. This would explain why during the Magog invasion, the Magog alliance is able to penetrate into central Israel without much resistance (without an Israeli neutron bomb slowing them down). And maybe these oil and gas discoveries will also be the political tool that helps Israel survive and prosper during and after these times. A different scenario, an alternative to the direct attack on Iran–attack the weaker surrogate Syria–and accomplish a similar effect. Let’s see if it plays out this way. Only the God of Israel knows for sure.

  13. dean staples on October 18th, 2009 2:00 pm

    Today is October 18 and I have been reading comments by a man named Phil over on YAHOO finance. He sure seems to know a lot about both the stock market plus oil wells. He comments about SHORT SELLING of Zion stock and this being the reason why the market share price is all over the place. I assumed this was due to people going in and out of Zion daily to make small or short term gains. He says it is due to SHORT SELLING. News to me but it does make sense. On Thursday of this past week(October15 Richard Rinberg posted the picture of the drill team installing a Christmas Tree or wellhead on the Rehoboth 2 well. When this man named Phil at Yahoo saw this wellhead installed he jumped to the conclusion that this means Zion has found oil and this wellhead or Christmas Tree means Zion is necessarily going to begin producing oil or gas. Please, if anyone that is reading this talkback that I am now producing sees this and you have expert knowledge of the oil and gas business operations, kindly write a piece stating if you believe Phil’s theory to be correct. According to his beliefs over on Yahoo finance, Zion stock is set to soar to new heights anytime because of this Wellhead being there, as I can deduce. Is he correct or is he all wet? He makes great sense regarding stock market assumptions, but I just don’t know regarding this one>Dean in Maine.

  14. Lyndon on October 24th, 2009 9:14 am

    Dean,

    I don’t know much about Christmas trees on oil rigs, whether this is standard operating procedure prior to completion testing or a harbinger of a producing well. And while I’m not a professional stock trader and I haven’t read Phils comments, I think the recent price action on ZN stock is due to several factors. Seems to me like the stock spiked up on Oct 13 because of the extra exposure from Steve’s appearance on Jewish Voice Oct 12 attracting more buyers. It was immediately shorted because the shorts anticipated weakness in the stock soon because of of the rights offering (people willing to sell some of their stocks to raise cash in order to participate in the rights offering). Shorts like to get in on spikes that they know won’t go anywhere. ZN since then has gone down because of both shorting and selling to participate in the rights offering (probably more on shorting, since at these prices, it becomes less profitable to sell to participate in the rights offering). This weakness may continue, with some fluctuations, until Nov 30 when the rights offering closes. Shorts also know that there probably won’t be any good news to worry about until around Dec when they can get a rig for completion testing (unless ZN can find a rig sooner). Steve might know more about the postivie significance, if any, of the Christmas tree structure.

  15. admin on October 30th, 2009 4:18 am

    Dean,
    I’m not a stock trader either. Thank God. The only thing I really understand about a company’s value is in its ability (or potential) to produce the goods it was created to produce. Until an oil and gas company produces oil or gas, it’s value is speculative. If there are people out there making (or losing) money by playing speculation games with stock in a company that hasn’t yet produced what it was created to produce, then they don’t own the stock for the reason it was intended and, in my opinion, only detract from the long term health and goals of the company they own a part of. Here’s my not so ‘stock broker slick’ opinion: If you invest in a company, invest in its purpose. If you’re not interested whether an oil and gas company actually ever produces oil or gas, you don’t belong.

    Re: Christmas trees – that’s the subject of a future post.

  16. dean on November 2nd, 2009 1:26 pm

    I appreciate so much Steve’s ability to fill in between the lines when there seems to be no one else to do so regarding the Israel project. What I like about his opinion is that he has been there from the beginning with this company and can quickly separate fact from inuendo. From what I have seen on other posting boards, they would leave you hurting if you dared believe them.I believe the guys at ZION, trouble is they can’t safely really tell us too much. I have a sincere feeling in my gut that Zion is not gonna give up until they win and that is why my position will be long with them un til Jesus comes back. Selah!

  17. dean on November 3rd, 2009 12:05 pm

    I am curious why it is necessary to cement in the hole liner? I assume they do this so that is they ever pull out the steel liner that the hole won;t collapse? How did I do?

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