Zion Oil & Gas Inc (ZNOG)

[KyOil]

The 3 major phases of an exploration well once its location has been determined:

1. Drill the well to target depth. If hydrocarbon shows and drill logs look encouraging, then test the well. If no shows and drill logs don't look good either, then plug the well.

2. Test the well. If the well has enough flow and pressure, then complete the well. Otherwise plug the well. Tests include logs and flow/pressure.

3. Complete the well, which involves setting production tubes/valves and probably enhancement/stimulation. Use the completed well to size the reservoir and then plan the next well.

Sections of the referenced updates are quoted below and the process tied together with my comments.

In the Nov 11, 2021 update Dunn refers to the process with the reference to "completion" in bold by me. They were (1) drilling, and based on (2) testing, the well would be (3) completed. Testing program should commence in 1Q2022.

In the Nov 23, 2021 update Dunn says drilling is complete, all test equipment are on site, and test personal are assembling the equipment.

In the Jan 10, 2022 update Dunn says logs are complete and based on that result then completion liners are being ordered and crews are coming in to install them. Additional tubing etc has been ordered.

In the Feb 16, 2022 update Dunn says all "completion" services have been secured, as well as enhancement and reservoir testing.

Conclusion - as of Feb 16, MJ02 was being prepared for completion, enhancement, and then reservoir testing. Interesting that the statement "testing was successful so we are completing MJ02" was never made (statement that drilling was successful was made). Yet, per the process Dunn defined in Nov 11 update, which is consistent with industry practice, completion would only take place with successful testing. Its speculation of course, but I would guess that flow testing of MJ02 has already been done and was successful; if oil, that means it free-flowed to the surface; if gas, then there is plenty of pressure. Now the well is being completed to size the reservoir. We are not home free yet: it could be a small reservoir and hence not of great value. I wonder why Zion did not announce successful testing of the well (only announced that logs were complete, which is not the exciting part of BOPD), and that the next step is to size the reservoir. Perhaps they are trying to avoid the disappointment from MJ01 where they announced oil in the well, but it was a small amount and would not free flow. Or, perhaps, they thought investors would get confused between well testing and reservoir sizing. But, it seems to me if MJ02 free flowed at XXX BOPD, it should have been announced. Just one of several mysteries with this company and this well.

My comments are speculation. Please perform DD and own your investment decision.

November 11, 2021
Update: MJ02 In Israel
Dear Zion Supporters and Shareholders,
Thank you for your patience and perseverance.

Active drilling of the Megiddo-Jezreel #2 (MJ02) project continues unimpeded. We are making progress toward drilling to total depth what will soon be, by God's grace, a significantly deeper well than the MJ#1 well.

We are currently in the fourth and final section of well. This section contains multiple areas of potential interest. All necessary well testing equipment is now on location, and the testing crew's visas have been approved and issued by the authorities. The testing program has been submitted to the regulatory body and should commence in this quarter.

We are in continuous dialog with Israel's Energy Ministry concerning the timeline for testing, and based on the testing, completion of the MJ02 well.

DALLAS, Texas, and CAESAREA, Israel, November 23, 2021
Zion Oil & Gas, Inc. (OTCQX: ZNOG) announces the completion of the drilling phase for their Megiddo-Jezreel #2 (MJ-02) well.

“We are thankful for the successful completion of our drilling phase,” expressed Zion Oil & Gas CEO, Robert Dunn. “We are eager to move forward with testing immediately based on encouraging hydrocarbon shows.”...
All testing equipment and personnel are in Israel, and Zion is assembling the required equipment at the well site for the comprehensive testing.

January 10, 2022
Update: MJ02 In Israel
Dear Zion Supporters and Shareholders,
We very much look forward to 2022 with all of you.

Zion has been actively moving forward, and thankful that we have completed our planned logging operations.

After reviewing these logs, our third-party engineering group has recommended bringing in specialized completion liners for the next steps and for the indicated zones of potential production.

We are also moving ahead with entry requirements for our additional completions and testing crew. To this end, additional tubing and ancillary items have also been procured and are in the shipping process.

February 16, 2022
Update: MJ02 In Israel
Dear Zion Supporters and Shareholders,
2022 has kicked off to a fast and exciting start for Zion and its operations team as we prepare to continue developing and testing the MJ-02 well.

We are pleased to announce that all necessary services for completing the well, along with enhancement and reservoir testing, have been secured.

Zion has partnered with some of the leading Petro physicists and stimulation experts in the United States to plan the next phase of the operation.

As Zion continues to navigate manufacturing and logistical delays, the plan is to resume operations in quarter one.

These operations will start with necessary re-certifications and inspection of the rig while also upgrading critical systems that will benefit this operation and allow for enhanced drilling operations in the future.

Upon completing the inspections, upgrades, and rigging up, the crew will complete the final casing and tubular run before moving on to the enhancement and reservoir testing phase.