Zion Oil & Gas Inc (ZNOG)

[KyOil]

Press release said ZN is beginning to get answers to MJ#1 questions. Stated in the Nov 29, 2018 press release was the following:

A summary of what Zion believes to be some key questions left to be answered are:

1. Is the missing shallow Senonian age source rock a result of regional erosion, or is it missing because of a fault that cut the well-bore and could be reasonably expected to be encountered in the vicinity of the MJ#1 drill site? Zion believes this is an important question to answer because if the Senonian source rocks do exist in this area, the high temperatures encountered are sufficient to mature these source rocks and generate oil.

2. Do the unusually high shallow subsurface temperatures extend regionally beyond the MJ#1 well, which could allow for the generation of hydrocarbons in the Senonian age source rock within our license area?

3. As a consequence of seismic remapping, where does the MJ#1 well lie relative to the potential traps at the Jurassic and Triassic levels and was the well location too low on the structures and deeper than the potential hydrocarbons within those traps?

The first two questions are related to Cretaceous (Senonian is in the Cretaceous) where 4 zones of interest were identified in MJ1 at about 1200 meters. The first question deals with the expected source rock not being found. The second deals with the range of the high shallow temperatures. If the answer to the first is the source was missed because of a fault, and the answer to the second is that high temp extends beyond MJ1 site, then the Cretaceous has good prospects of being commercial. If the answer to the first is the source rock is not present regionally, and the high temp is localized around MJ1, then the Cretaceous will not be of interest.

The third question has to do with the Jurassic and Triassic. The primary target of MJ1 was the Mohilla formation in the Triassic. The question is are there traps in the Jurassic and Triassic that MJ1 missed? If there are not traps, then the Jurassic and Triassic are not of interest. Its not difficult to miss a trap when drilling a wildcat well. With MJ1 drilling info and the new 3D info the trap, if there, has a much higher probability of being found.

ZN likely has other questions beyond those stated.

Note that the Jurassic source rock was not questioned. They likely drilled through it per the drill reports. They did not say, but its not likely they intended to drill deep enough into the Triassic to find its source.

Remember basic oil geology: time and temp makes oil/gas in the source rock which is rich in organics; then the oil/gas rises upward until it is "trapped" in a formation with a cap rock above a porous rock. The cap prevents the oil/gas from making it to the surface, and the porous rock holds it. If a well is drilled too far from the center of the trap, then it is said to be "too low" in the formation and hence below where the oil/gas is.