“Special Report – Zion Oil”
August 16, 2011 by sspillman
(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.
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.