Filed
pursuant to Rule 433
Registration
Statement No. 333-164563
Zion Oil
& Gas Newsletter
October
1, 2010
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Dear
Shareholder and/or Friend of Zion
As you
can read below, Zion's current drilling operations in Israel continue
apace.
In
addition, Zion is holding a Rights
Offering for
every stockholder who held
Zion stock on September
28, 2010.
On
September 20, 2010, we announced that we would soon be launching a rights
offering. Please click
here to read the press release.
For full
details of the rights offering please review the prospectus supplement (that
contains a description of the rights offering and other information) that was
filed with the SEC on September 29, 2010, but for your ease of reference, here
are some of the basic details.
Under the
rights offering, Zion will distribute (at no cost to stockholders)
non-transferable subscription rights to holders of Zion’s common stock on the
close of business on the record date of September 28, 2010, to purchase their
pro rata portion of approximately 3.8 million Units of Zion’s securities Unit at
a purchase price of $5.00
per Unit.
ONE UNIT (purchase price
$5.00)
consists
of:
ONE SHARE of Zion’s
common stock
plus
ONE WARRANT to purchase
an additional share
of
Zion's common stock at an exercise price of $4.00
|
Under the
rights offering, stockholders of record on September 28, 2010 will have the
right to subscribe for EIGHTEEN
Units for every ONE HUNDRED shares of common stock owned on the
record date, equivalent to 0.18 subscription rights for
each share of common stock owned on September 28, 2010.
If the
Company receives valid subscriptions for all of the Units available under the
rights offering, then the gross proceeds of the offering will be approximately
$19 million, before offering related expenses which we estimate should not
exceed $150,000. This figure does not include proceeds, if any, from any future
exercises of the Warrants included in the Units.
The
Warrants, which will be issued together with the shares of Common Stock included
in the Units, will be exercisable for a two year period, beginning on the
closing date following the expiration of the rights offering, at a per share
exercise price of $4.00.
The
rights offering is planned to continue until November 15, 2010 (subject to
Zion’s right to extend the offering).
The rights offering will include an
over-subscription privilege, allowing a stockholder who exercises all of
its basic subscription privilege the right to purchase additional Units that
remain unsubscribed at the expiration of the rights offering, subject to the
availability and pro rata allocation of Units among stockholders exercising
their over-subscription right.
The
proceeds of the rights offering will be used to further our oil and gas
exploration program and, depending on the amounts raised, implement our plans to
establish a drilling company to acquire control of the rig currently being used
in drilling the Ma'anit-Joseph #3 well, as well as general corporate
purposes.
As soon
as practicably possible, we plan to mail to holders of Zion's common stock (as
of the close of business on September 28, 2010) a copy of the prospectus
supplement, subscription materials and other items necessary for exercising the
rights.
Shareholders
who hold their shares in a bank or broker name will receive the rights offering
material from their bank or broker.
Please
note that this Newsletter is neither an offer nor a solicitation of any offer.
The securities are offered by prospectus only, and only within those States and
other jurisdictions in which the securities may be sold, and this Newsletter is
neither an offer to sell nor a solicitation of any offer to buy in any state or
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to the registration or qualification under the securities of any such state or
jurisdiction. The rights offering will be made by means of a prospectus
supplement that was filed on September 29, 2010, (File No.
333-164563).
We will
place some FAQs (Frequently Asked Questions) on our website at:
www.zionoil.com/investor-center
..........................................
Thomson
Reuters Correspondent at the Ma'anit-Joseph #3 Wellsite
On
Monday, September 27, 2010, a Thomson Reuters Correspondent visited the
Ma'anit-Rehoboth #3 wellsite. There is still much interest in oil and gas
exploration in Israel, especially because of the size of some of the recent gas
discoveries. The Correspondent told me that Reuters plan to run an 'in-depth'
article about oil and gas exploration, due to the great interest being shown in
the subject. He was very interested in our operations and I would not be
surprised if he pays us a return visit quite soon.
...........................................
Left
to Right: Ilan Sheena (Zion's Managing Director of the Israel Office) and
Richard Rinberg (Zion's CEO) at Israel's Chamber of Commerce, Tel
Aviv.
On
Sunday, September 19, 2010, Zion attended a meeting at Israel's Chamber of
Commerce. The meeting was attended by representatives of all the main oil &
gas companies exploring for hydrocarbons in Israel, both onshore and offshore.
The purpose of the meeting was to create an organization that will represent the
oil and gas industry to the government, the press, or anyone else, as required.
At present, there is no representative trade body for the oil & gas
industry. I see this as another welcome step in the development of Israel's oil
& gas industry.
...........................................
Finally,
here is an update regarding our current drilling operations.
On August
26, 2010, we announced that drilling operations had begun on the Ma'anit-Joseph
#3 well, in our Joseph License area, onshore Northern Israel, and that the
drilling operations were expected to last approximately six months.
Following
our suspension of drilling activities for Yom Kippur, spanning the period from
the evening of September 17 through to the end of daylight on September 18, we
resumed drilling a 17-1/2” hole reaching a total depth of approximately 3,965
feet.
When
drilling of the 17-1/2” section was completed, we acquired open-hole well log
data that provides us with useful geologic information about the rock already
penetrated by the drill bit. Following the logging operation, the
next length or “string” of casing (13-3/8” in diameter) was run into the hole
and cemented in place.
After a
string of casing is cemented in place, integrity tests are performed to ensure
the cement bond is adequate for the anticipated well conditions. In
addition to these pressure tests, a cement bond log is run that gives a visual
indication of the cement bond integrity between the casing and rock
face. The results of these tests run on the Ma’anit-Joseph #3 well
were ‘favorable’ allowing us to proceed with drilling the next hole
section.
In
addition to conducting periodic well integrity tests, we also conduct frequent
tests of our surface blow-out prevention equipment. During the past
two weeks we conducted such tests and confirmed our surface safety equipment to
be in good working order.
One
of the safety signs at the Ma'anit-Joseph #3 Wellsite
So with
the 13-3/8” casing firmly in place, we began drilling the next section of
hole. As of Friday October 1, we are drilling a 12-1/4” hole at a
depth of approximately 1,453 meters (4,767 feet). Drilling this
section of the well is expected to require approximately four
weeks.
"In
your good pleasure, make Zion prosper..."
Psalm
51:18
Thank you
for your support of Zion and Shalom from Israel
Richard
Rinberg
CEO of
Zion Oil & Gas, Inc.
www.zionoil.com
FORWARD LOOKING STATEMENTS: Statements
in this communication that are not historical fact, including statements
regarding Zion's planned operations, anticipated attributes of geological strata
being drilled, the presence or recoverability of hydrocarbons, the sufficiency
of cash reserves, ability to raise additional capital, the successful
establishment of the drilling subsidiary and the negotiation and execution of
definitive agreements with the current owner of the drilling rig with respect
thereto, timing and potential results thereof and plans contingent thereon are
forward-looking statements as defined in the "Safe Harbor" provisions of the
Private Securities Litigation Reform Act of 1995. These forward looking
statements are based on assumptions that are subject to significant known and
unknown risks, uncertainties and other unpredictable factors, many of which are
described in Zion's periodic reports filed with the SEC and are beyond Zion's
control. These risks could cause Zion's actual performance to differ materially
from the results predicted by these forward-looking statements. Zion can give no
assurance that the expectations reflected in these statements will prove to be
correct and assumes no responsibility to update these
statements.
NOTICE
Zion Oil & Gas, Inc. has filed a
registration statement (including a prospectus) with the SEC for the offering to
which this communication relates. Before you invest, you should read the
prospectus in that registration statement and other documents the issuer has
filed with the SEC for more complete information about Zion Oil & Gas and
its offering. You may get these documents for free by visiting EDGAR on the SEC
website at www.sec.gov. Alternatively, Zion Oil & Gas will send you the
prospectus if you request it by calling toll free 1-888-TX1-ZION
(1-888-891-9466).
Contact
Information
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
More
information about Zion is available at www.zionoil.com or by contacting Mike
Williams at Zion Oil & Gas, Inc., 6510 Abrams Rd., Suite 300, Dallas, TX
75231; telephone 214-221-4610.
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