Actually, oil has been found in Israel before, and the country currently produces a few hundred barrels a day (plus natural gas). It isn't exactly meeting the nation's energy needs, but oil has been found and produced there before. Oil has also been found around the Dead Sea and perhaps in the Golan Heights, but those are not currently economic. They also have a fair amount of oil shale, which could produce significant amounts in the future.
Zion Oil's story was much more based on faith and hope than it was on facts, and that is never a good investing strategy. Based on the actual results of that well released today, I am not at all surprised the price tanked. I am sure many investors were convinced that oil would be gushing from anything the Company touched.
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