Zion Oil & Gas Inc (ZNOG)

[JRyan]

My opinions on the "Seeking Alpha" Article


First I respect Seeking Alpha, been signed up for years. Why they did this I do not know but I know that they have not since and it went to the Financial Times instead.

Panda's attempt Jul. 26, 2017 10:30 AM ET

This will be long so bear with me. I remember reading it but it was nothing more than a scan. At that time I did not know who Panda was. He is a known Shorter, says so right in the article and that he shorts Zion (at least then)

Jul. 26, 2017 10:30 AM ET Summary
Suspicious trading patterns highlighted.
Running out of cash and Going Concern Notice.
High CFO turnover + unknown auditor that was recently fined by SEC.
Bad science - Filings show no oil and used the wrong oil survey methods.
Insider enrichment (executives and board egregious compensation).

Now bear in mind I am reading as I go and typing my thoughts as I read each section.

"I and an account advised by the author hold a short position in Zion (both directly in ZN equity and via options). All the information in this report has been sent to SEC, specifically the Dallas Fort Worth Office, and also submitted directly to Nasdaq’s Market Abuse Group."

BINGO! Now we know, he admits it!!!! Gee thanks as I had this as occurring in January of 2018, not 6 months prior! Still I think it took multiple attempts.

impressive resume of having a history of 17 years of Oil & Gas Exploration and having never generated any Oil Revenue.

Seems to be common true claim from shorty. We are a Wildcat operation so that is not a surprise. (I think we will shortly not be a wildcat operation!)

are currently drilling on a location WITHOUT Proven or Probable Oil Reserves

Well I guess that is true and that is why we are trying to change that. Proven reserves have to be proven. There is oil in that area. Givot found some and the USGS says it is there:

Givot! What is the deal with them anyway?
Possible Reserves?

Going Concern Notice and highlighting the expected date that Zion will run out of cash. Not to mention that Zion’s license to drill actually expires later this year.

Well that is moot now isn't it? Was it a 2 year extension of the license? Yes it was.

BINGO! - Zion Is A Short Seller’s Gift From The Gods

Well with a little help from Panda and Probes I think they are right, that is until they are wrong.



These guys are good with fancy graphics. But I marked an X through the ones that are garbage and a question mark with ones that I feel are a stretch.

Bad Science –Horribly outdated bad science. The company only uses 30-year-old oil exploration methods + the power of Prayer to justify drilling dry holes (see the very important discussion on 2-D vs. 3-D Oil Exploration). Our Scientific Smoking Gun.

Well your smoking gun is a dud. That has been explained as to why not to spend the coin for 3D if it is not necessary. They did not have 3D 40 years ago either.

Insane CFO Turnover (7 CFOs in 10 years with 1 resigning in the last year).

Well if they are not doing their job then that is a no-brainer. Zion does not pay as well as other company's and skilled folks are in demand. That is a stretch Panda.

Unknown Auditor recently punished by the SEC!

Ok that one is worth asking questions about. I would bet they were low bidder or something of that nature but I do not know.

"A going concern is a business that functions without the threat of liquidation for the foreseeable future, usually regarded as at least within 12 months." A going concern notice means the company is not likely going to continue as a going concern. Thus, we interpret this Going Concern Notice to mean that there is a high possibility that Zion will need to liquidate or file for bankruptcy before December 31st.

Gee where do I start? NO DEBT, they raise the funds when needed, not borrowed. Well the December guess is dead wrong there Panda!



They raised all the funds they needed to finish and test the well. Here is the kicker, they did NOT extend the last rights offering. They do not seem concerned about it.

Lots of Meaningless Press Releases

Well I for one as a shareholder wish they had more. I want to know what is going on but your little game with the SEC has caused that to wither away. They are on lock down, but i think it is for what they have found not your SEC hitjob.

No Money Big Problems (Running out of cash in the immediate future) – 2017 Q1 10-Q cites running out of Cash in June 2017. Recent Press Release says only has enough funding to finish drilling the current unproven well and neglects to mention how much cash was raised. I’m not sure an investor should put faith in their press releases.

Not batting very good are ya Panda. With this average you will never make it to the majors.

"We are pleased to announce that the company raised sufficient funds to drill and test the current well to its proposed total depth, with the ability to also pay for unanticipated financial contingencies."

~Zion July 20th Press Release

Seems Zion was again telling the truth.

Egregiously High Executive Compensation And Insider Sales

This is a continuing argument the noise is using. I think at least in my mind it has been debunked.

Executive Pay and Zion Oil

Bankruptcy Filing For An Overpaid Board Member

NOTE: FORMER Board Member

LOTS OF DAY-TRADERS INVOLVED

Well there are lots of those on here, how about including short and distort traders in your calculation?

Threatened To Sue A Short-Seller

I find that one funny as I did not know that in 2009, thanks for the information. It is all being documented there Panda. Have fun.



Thanks Zion for giving me 60 days for the opportunity to sell my warrants at a profit. (disclaimer < I own none of these warrants)

Smoking Gun #1 - The Trades

I am not experienced enough to really comment other than you seem to be griping that it is day traded? What about short and distort trading?



I like it! Seems it is going the other direction now as planned by people watching out only for Zion shareholders. Of course it is only that, nothing nefarious now is there?

Zion has ZERO oil reserves. Yea Nothing, Zilch, Nada.

At the time you wrote this it was true. It still could be but then again it could also be the time Zion no longer is called a searcher for oil but now could be a producer. It could go either way.

. All of them were flabbergasted about the idea of drilling a new well on an area with absolutely ZERO evidence that there is oil there.

WRONG

Givot! What is the deal with them anyway?
Possible Reserves?

Proper drilling would require a company to know exactly where in the ground, the composition of the soil, depth level as well as the likely oil & gas mix so they could drill to the proper depth use the proper propellants, etc. in order to extract the resource. This requires the proper 3D survey work to be done ahead of time.

Just so you know, 3D has not been around that long and plenty of oil fields have been found without it. This is FACT. Folks Zion used information gathered over the years to choose a spot to drill. It is not blind at all.

Exploration History

I would like to defer to some of the experts on this as I am ignorant of this topic other than what I have read.

3-D oil exploration vs. 2-D oil exploration.

This has been covered but I will let those more knowledgeable on this answer it. I believe that Zion said that they saw no need as they had the information they needed from the 2D. We will all know soon will we not?



How Cute! I guess we all are on edge of our seats now.

Zion is attempting to drill 4,500 meters down. Thus, 2D seismic work for them should cost $9,000 vs. $24,750 for the most expensive 3D seismic work. Note that Zion Management has stated that current drilling costs run $60,000 a day.

I am not sure I buy this but it is a legit question. If only that much, why didn't they? Then again, I wanted them to go deeper in the last well but they did not listen to me then either.

Losing The Megiddo-Jezreel Petroleum License:

Press Release: Zion Oil & Gas Receives Multi-Year Extension on Megiddo-Jezreel License

DALLAS and CAESAREA, Israel, November 27, 2017 – Zion Oil & Gas, Inc. (NASDAQ: ZN) is pleased to announce that on November 20th, 2017 Zion received a two-year extension on its Megiddo-Jezreel License No. 401, extending its validity to December 2, 2019.

Zion Oil & Gas Receives Multi-Year Extension on Megiddo-Jezreel License

That lease was set to expire on Dec 2, 2016 unless Zion set a date where they would “spud” a well and also got a drilling partner to sign on. Both of which are a very difficult task when you don’t have enough cash to finish drilling the well, have a going concern notice, and don’t have the necessary survey work to show a drilling partner that there is any oil at the proposed location.

Well gee, and here we are waiting on results of a drilled well. Panda, this is a poor batting average.

Enter Daflog SA - 1 week before Zion’s timeline Israel Petroleum Commissioner was up and they finally found a drilling contractor that would work with them. It turns they decided to work with a bankrupt and insolvent company from Romania.

This should absolutely be a concern. I however bet, that the price was right and here we are , a drilled well.

Zion’s True Purpose – Paying Large Executive Salaries And Issuing Shares.

This one is apparently an important one for the shorts. They will not drop it and it keeps coming up. I did my research on it and so have others.

Zion Oil Management - Raising the Bar
Executive Pay and Zion Oil

Management also excels at issuing shares

They are pretty good at not having any debt also. What about that? It's the model we have until we either are successful or turn in the towl.

Fuzzy Panda Written Track Record:

His batting average on this article is lacking....

So now we KNOW with a reasonable assumption who paid Probes Reporter.

Disclosure: I am/we are short ZN.I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I wonder why Seeking Alpha has not had him back? It would seem that the Financial Times has that role now.

Still, I think all Zion Shareholders should read this. Why? It lays out the battle plan we have witnessed the last month and that is ongoing. Nice for them to publish their attack plan for us.