Zion Oil & Gas Inc (ZNOG)

[microcaps1]

Posted as a public service message


I have largely previously posted dd re these things-refer to my previous posts and other longs posts
if there are more issues to address guys remind me

re the next well:
under the most optimistic of conditions the 3d survey will quickly find a commercial field

and under the most optimistic of conditions somebody may partner w zn via a large cash infusion -just as the meged oil wells co Genie received a 50M cash investment from A-TEV

or receive a buyin from Delek - Delek bought 70% of the license abutting ZN's concession to the west

there are actually more optimistic though less likely conditions
ranging from a modern day jed clampett to earthquakes etc but since ZN has the exclusive rights to its license area the spoils would go to ZN

re drilling plans;
drilling plans will be dictated by the 3d survey surrounding the MJ1 well- and thus the next well can hopefully be drilled from the same drill pad to save time and money

re debt:
ZN pays as it goes - doesnt get into long term debt-only such long term debt is bonds which are convertible into common stock and thus ultimately wouldnt cost zn much more than fees

re russell index and nasdaq:

much of the hullabaloo re the russell index is irrelevant- ZN got by for 18 years without being on such- and russell index investors have had 9 months to get out since pps 1st fell below one dollar ca sept 25-27- zn is a spec investment for them and will remain a spec investment for them- doesnt make sense for them to hold if they plan to get out so those who planned to get out for the most part probably have

most co's like ZN apply for another 180 day extension to bring pps to one dollar by building shareholder value-which extensions are regularly granted if the applicant has any reasonable plans-exchanges dont like to lose the 150k in fees /year

if at the end of the 2nd 180 days jan 8,2020 pps is not going to otherwise be over one dollar zn can r/s to stay on the nasdaq-they've signaled their intention in a filing i posted to transfer to another level of the nasdaq during the 2nd 180 days and have not given any indication they would r/s yet


re informal no wrongdoing asserted investigation:
they/ve never been investigated before and said it was due -though the cause was a complaint by an apparent shorting cartel or entities associated w such who apparently dont politically agree w zn's purposes- sec has not indicated any wrongdoing

zn was ca the 5th fastest growth co on nasdaq last june- and if they discover a commercial reservoir they may again be one of the fastest growing- thats one of the reasons they are a spec co invested in by funds looking for spec investments(bc non spec investments usually have small % returns)

renewable lease
and if they discover a commercial field their license would be converted to a 30 yr lease renewable for another 20 years

delek etc
there is increased activity around zn's license-e.g. delek- which owns 45% of leviathon bought 70% of the license adjacent to zn on the west=
probably figuring the offshore strata may continue under onshore israel- such offshore strata is 5000 to 7000 meters deep- zn's oil shows were near the td bottom at ca 5000 meters w evidence of a petroleum system-
we have no evidence of a delek etc deal but if delek invested in zn's license in some form of deal that would speed things up

re p/b:
price /book of 10 is not unusual for a non-revenue company(and its common for revenue co- a p/b below 3 in a revenue co is a value co, which is relatively rare)
price/book and pps for non-revenue co's depends on potential going forward
in spec co's with no revenue it is not unusual to have price/book ratios of 50-100- fairly common from what i've seen-and i've seen as high as probably 1000- i was often amazed at the p/b ratios of spec co's,as i now remember


re timing of next well:
if a commercial field is found during the survey a new well[possibly from the same pad as the exploratory well(since the 3d survey will surround such well and horizontal drilling can easily extend a few miles now)could be drilled,sooner if delek etc participated.

re assets
zn had close ca 42M assets til write off due to the noncommercial exploratory well-and if such well aids in discovery of a commercial field due to the 3d survey of 60 square km around the well what then?

they have an experienced C level team with the main players having over 30 years experience in oil and gas industry-and apparently are able to acquire necessary expertise for less than the prevailing compensation bc those acquired assets believe in zn's cause and want to be a part of something special as Dustins on-boarding etc letters indicate

and the 3d survey specialist they brought over from viking has 26-28 years of experience/surveys and has supervised as much as 6 wells or surveys and 500 people at a time

re exec pay
the exec compensation committee displayed info showing zn execs were underpaid cf to similar competition and much of their pay is is in stock options to conserve cash-and such options are valued at either the time the option becomes available or is exercised

-so their pay has been much less than some have advertised- those who say zn pps dropped x% should note that the portion of exec pay attributed to stock is much less ,having lost value like everybody else's stock,especially since a filing indicated execs had an agreement to not sell since ca may 17 2017- weeks before the mj1 well was spudded- and execs no doubt restricted themselves to help avoid harmful speculation
and thus execs have not sold stock since may 2017 -except one ex exec who donated stock to nonprofits etc

re ceos'

victor's lawyer/judge experience was valuable in helping pioneer zn's negotiation of the incipient israel onshore oil and gas exploration regs,as his letters indicated

ceo dustin unselfishly resigned so ZN could save money(filing indicated streamlining) as per his resignation letter so his friend Robert Dunn- a 3d specialist from Viking -could be brought in as director of operations -if ZN again needs a drilling specialist we may see dustin again

in a bigger company Dustin could stay on as a part of large co's top heavy management but ZN is running streamlined to put more dollars to the actual geophysical work

when a drilling specialist is again needed,it sounds like dustin would be willing to execute his drilling expertise again

small co's cannot afford to pad management-but zn is attacked no matter what they do