Zion Oil Opens $31+ Million Rights Offering

June 27, 2011 by  

Zion Oil's Ma'anit-Joseph #3 well

On Thursday, June 23 Zion Oil & Gas, Inc. (NASDAQ: ZN) filed a prospectus with the SEC for a $31.25 million rights offering to current stockholders. The rights offering consists of 6,250,000 non-transferable subscription rights @ $5 per Unit. Each subscription right Unit includes (1) share of Zion common stock and (2) warrants to buy additional shares of common stock @ $3.50 per share. Zion stockholders will receive (1) subscription right Unit for every (4) shares of Zion common stock they own as of June 15.

What this offering means is that if a Zion stockholder owned 1,000 shares, for example, of common stock on June 15, Zion will send, at no charge, 250 ‘subscription rights Units’. Each Unit, if exercised @ $5, entitles the stockholder to (1) share of Zion  common stock and (2) warrants to buy additional shares @ $3.50 within one year of the offering’s close. Exercising the Unit offering including the Warrants would cost the stockholder a total of $12 per (3) shares of Zion common stock. As of this writing Zion common stock is trading on NASDAQ (ZN) @ $5.56 – buying (3) shares of Zion common stock at the current trading price would cost $16.68.

This offering is currently scheduled to close on July 25, 2011. Even though the offering limits stockholders to (1) subscription right per (4) shares of common stock owned, stockholder may oversubscribe to purchase additional that remain unsubscribed at the close of the offering, subject to availability and allocation.

If fully subscribed, Zion will raise $31,250,000 from the sale of Units, and if the warrants are fully exercised within a year of the offering’s close, an additional $43,750,000. According to the Prospectus Zion Oil & Gas will use proceeds from the offering “for (i) furthering our oil and gas exploration program by carrying out geological and geophysical studies on our exploration areas, (ii) complete logging, interpretation and any production testing that may be deemed needed with respect to the Ma’anit-Joseph #3 well (iii) drilling a well on our Jordan Valley License and (iv) general corporate purposes.

Zion’s Prospectus describes the company’s current and applied for exploration territory in Israel:

We currently hold two petroleum exploration licenses, which we have named the Joseph License and the Jordan Valley License, covering approximately 139,000 acres of land onshore Northern Israel.  A third petroleum exploration license, the Asher-Menashe License covering approximately 79,000 acres of land adjacent to the Joseph License, expired on June 9, 2011, its scheduled expiry date. We have continuously held the Asher-Menashe since June 2007 and we have drilled one exploratory well in this license area. Prior to the expiry of the Asher-Menashe License, we submitted to Israeli Petroleum Commissioner an application to extend the license. We do not believe that the Israeli Petroleum Commissioner will deny our application for the extension while we have a current well on the site; however, no assurance can be provided that the requested extension will be granted.

“In February 2011, we submitted to the Commissioner applications for two exploration licenses and an application for a preliminary exploration permit. One of the license applications and the application for the preliminary exploration permit cover substantially all of the area covered by our previous Issachar-Zebulun Permit, which expired on February 23, 2011. We named one license application (with respect to part of the previous Issachar-Zebulun Permit) the Jordan Valley License Application and the preliminary exploration permit (applied for with respect to substantially the balance of such area) the Zebulun Permit Application. We named the other license application the Dead Sea License Application as it relates to areas within the vicinity of the Dead Sea.”

Comments

11 Responses to “Zion Oil Opens $31+ Million Rights Offering”

  1. Peggy Coleman on June 27th, 2011 12:54 pm

    I am interested in becoming a stockholder. How do I go about this?

  2. Pearl Goh on June 28th, 2011 6:46 am

    I am interesting in buying the shares of Zion oil. Please recommend me a stockbroker

    Thank u

  3. Dan Agnew on June 28th, 2011 11:27 am

    Can I buy shares of the offering?. Is there a minimum I have to buy? Please send me information.

  4. Bill Baker on June 29th, 2011 1:38 pm

    I’m a stock holder, would like to get these warrents, where do they come from? How do they know we own the stock? How do we file to exercise these?

  5. Bill Baker on June 30th, 2011 5:02 pm

    Called the broker Scott Trade whom I opened an account with to buy stock, the representative stated that the SEC would send them notice of this ‘warrent offering’ so that they could exercise this. To date this has not arrived, they knew nothing of this offering. So I’m guessing here that this notice is a bit premature to the actual offering from brokerage houses, electronic trading etc.

    Good side of this is the price of ZN continues to climb, seems to be gaining in strength without much happening at the well head.

    I’m a bit confused from the mix of postings and announcements here as to actual finds of gas and oil, vs potential finds. My understanding at present is known reserves of gas, large volumes in rock, needing special process to extract, by-product of extraction is water production.

    Please correct me if I’m wrong.

    Regards

  6. Bill Baker on June 30th, 2011 5:38 pm

    another question is what of other company’s drilling in Israel – are they not the same as ZN seeking the same end? I don’t read much more of them, yet read of them in the 2009 – 2010 time frame. What happen to them?
    ISRAMCO NEGEV 2
    Delek Drilling
    Avner Oil Exploration
    DOR GAS Exploration

    Delek and Dor Gas were noted to have large part in gas finds.

    Where are they now? What is their status or place in the search for oil in Israel?

    Regards

  7. David on June 30th, 2011 10:21 pm

    Scottrade is a good way to buy stock. Their cost is $7 dollars for a purchase or sell order online. It’s a little more if you call them and have them make the purchase manually. That’s a good/fair price. Just look them up on the internet and sign up. You’ll have to transfer some money into a purchase account from which to make the purchases with. You can buy and sell online then. I started an account with them specifically to purchase this stock a few years ago. David

  8. Alexander Zephyr on July 11th, 2011 8:39 am

    I already did – you not posted it.

  9. Lela Enrico on July 14th, 2011 1:10 pm

    I don’t know anything about investing but I would like to know more about it. I don’t know how to get started to invest. I also want to know how much a does a share cost and how many do I have to buy.

  10. Mike Sanders on July 19th, 2011 8:04 am

    I read about the newly found oil on a site in January 2011 which related this find to fulfilment of Ezekiel 38 and 39… I follow this information based on it’s biblical prophecy fulfilment. Since that time in January the site also published evidence in scripture of the exact day Israel was to be reborn. If you are interested in how all of this information on Oil in Israel, check out http://howlongolord.com/?p=219

    Mike

  11. Ed Rust on February 18th, 2012 8:01 pm

    I am interested in buying some stocks

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