Zion Oil & Gas Inc (ZNOG)

[JRyan]

At this point I will just plug some general numbers. I know they do not make sense but scale can sure be derived from it.

Using some assumptions here, 125 Million barrels of oil recoverable oil, only MJ2 as the well, and producing 15,000 barrels a day of oil.

What I notice is at todays price of $110 per barrel, Zion would make it to around $5 a share with no PE ratio. After expenses, BEFORE R factor, they would have $250 million in profit a year. That would be $0.40 per share for dividends etc. A drop to $50 a barrel drops it to $35 million a year, and $0.06 cents a share. The cutoff for profit is around $35 a barrel.

So using this 'find' as a basis, Zion does not have to find a mega field to be in the profit. This find would only cover 5% of said mission statement however. So what the next question would be is how would well #2 , #3 etc. work out. At $20 million a well, that is a hit as they could afford only 5 or so a year. Let's assume they get more efficient with drilling and cut the costs in developing the field. A 50% reduction in costs is not a lot to expect. So it took a year, so lets say 3 - 5 per year as they develop said field. I would not see a rush as the single well MJ2 would be depleted in 20 years, so well #2 is depleted in 10 years and so on. A find of this size does not meet the mission statement. It makes sense to expand the license and increase field size.

However, in first declaring a field the numbers would have to be conservative. These reserves would grow in size as the field is explored and developed. A 2X or 5X increase make a large difference. A 10X is a game changer. This makes sense that they want to explore more in their license area.

So, what if it is NatGas? I have never considered this but it is relevant. A pipeline would be needed for that, for a small oil find maybe not, use trucks. What if it is both? I do not even want to think about it as we know not the geology but we have to take that into account. NatGas is $8 a dekatherm and it is not cheap anymore. It will cause power generation issues in the USA and is so right now. All this green crap was done at $5 a dekatherm. Electrical Power for big business is getting near $100 a MWhr. That is a 50% increase in a very short period of time. So a gas find is not a loss by any means.

Of course what if it is dry? Then the share price will tank and most likely that would be the end of the dream. It is not guaranteed but likely.

What has surprised me is how these numbers look compared to share price right now. If Oil/Gas is found, then it is a buy at these prices with what we know. If not we are hosed and we take the loss. We know it is risky or at least we should.

I am happy, have plenty of shares. I know that at $5 I would be happy but I would be happy at $1. I want the mission to succeed and we will just have to wait to see the answer.

Hey Zion, how about some clarity on what is going on? You have had very patient shareholders up to this point. Throw us a bone please!


Here is my adjusted sheet with today's prices.