Zion Oil & Gas Inc (ZNOG)

[tisdal]

If a mistake has been made, it's this.

Zion's CEO, Victor G. Carrillo, added, "I am ecstatic to see clear evidence of hydrocarbons (oil and gas) in the deeper portion of our Megiddo-Jezreel #1 well – a project that we have been working on for years. However, at this time we cannot comment on the commerciality or ability to successfully produce the well. We ask that our shareholders continue to pray for safe and successful drilling, logging, and testing operations, and for God's wisdom for management as we make key decisions in the following days and weeks. Please be patient. We will provide further updates after we have adequate time to properly evaluate the logs and finalize our well testing program following the recent events."

It is very rare that an Exploratory (Wildcat) Well becomes a productive well. An Exploratory Well is used to locate the hydrocarbons. I am somewhat disappointed that Zion would even make a statement about the possibility of converting the well to production. That was never the purpose of MJ#1. It's sole purpose was to do what it has done (Discover a RESERVOIR, Discover an ACTIVE PETROLEUM SYSTEM, Acquire 3rd PARTY Results that are very positive.). To move the MJ#1 to production would be a huge bonus, is an unrealistic expectation, and is still possible.

What is an 'Exploratory Well'

An exploratory well is a deep test hole drilled by oil and gas exploration companies to locate proven reserves of recoverable gas and oil, both onshore and offshore. Areas that might contain oil or gas reserves are first identified using seismic data before exploratory wells are used to gather more detailed geological data on rock and fluid properties, initial reservoir pressure, reservoir productivity, etc. If oil or gas is discovered, a development well will eventually be drilled to extract the oil.

Exploratory Well (WildCat)

This was a rather large mistake by Zion to even mention that an Exploratory well would be considered for production of commercial oil. It is an inaccurate statement at best, and increased investor expectations for an unrealistic result.

The MJ#1 is an EXTREMELY SUCCESSFUL Exploratory well by the standards that should be applied to a Wildcat Exploratory well. It is unrealistic to have ever expected it to become productive. Yet, Zion is still pushing to produce this well and that is good, but we should not be disappointed if it does not. That was not its purpose.

MJ#1 is an EXTREMELY SUCCESSFUL EXPLORATORY WELL for the following reasons:

- MJ#1's purpose was to find and ACTIVE PETROLEUM SYSTEM [FACT: check that box].

- MJ#1's purpose was to find a hydrocarbon RESERVOIR [FACT: check that box].

- MJ#1's purpose was to drill and receive extremely positive Third Party Analysis that Hydrocarbons exist where it drilled [FACT: check that box].

In the world of E&P, MJ#1 is an EXTREMELY SUCCESSFUL Wildcat Exploratory Well.

I think that Zion should start to retract the statement that they want to produce hydrocarbons from the MJ#1 and start to discuss just how successful this well actually has been and the full potential it has uncovered during it's drilling process.

NEW QUESTIONS:

1.) What is the SIZE and MAKEUP of the discovered RESERVOIR?

2.)What is next to take advantage of this RESERVOIR? Drill a Producer? Perform localized 3D Seismic?


In a way, by making the commercial production statements about the MJ#1, or stating that they cannot comment about the MJ#1's ability to produce commercial quantities, Zion played right into the hands of the Short Position in this stock.

That was a big mistake.