Zion Oil Scores New Israel Exploration License

Israel has awarded Zion Oil and Gas Inc. another license encompassing about 75,000 acres, the USA onshore exploration company announced recently. 

The Megiddo Valleys 434 license allows Zion to start recompletion operations on the Megiddo-Jezreel 1 well (MJ-01). "Zion is deploying new technologies, focusing on new stimulation methods for MJ-01, and aiming to potentially unlock hydrocarbon flows in several identified key zones", the company said in a press release announcing the license, adding it has already secured service contractors and ancillary items and expects operations to start in the fourth quarter. 

The license covers the same area as New Megiddo License 428, which expired February 1 after multiple extensions since an initial six-month term awarded December 2020. The application for a new license had been delayed by the political crisis in Israel that saw the Middle Eastern country go through three parliamentary elections since March 2020, according to a Zion news release January 31.

It said in that announcement, referring to the Megiddo-Jezreel 1 well, "During the newly formed Israeli administration’s review process, we plan to maintain our I-35 drilling rig and related components on our current pad site and perform necessary rig maintenance, engineering, and design for the planned re-entry".

The granting of the Megiddo Valleys 434 license comes despite Zion itself raising a "substantial doubt" in its latest results filing about its capability to continue, citing "a history of operating losses and negative cash flows from operations".  

"We currently have no revenue generating operations", it declared in its quarterly filing with the USA Securities and Exchange Commission August 10. Zion reported $4.473 million in net loss for the first half of the year, while its cash and cash equivalents stood at $518,000 and its working capital totaled $362,000 as of June 30.  

"We expect to incur additional significant expenditures to further our exploration and development programs. While we raised approximately $921,000 during the period July 1, 2023 through August 8, 2023, we will need to raise additional funds in order to continue our exploration and development activities in our license area", the regulatory disclosure stated. 

Zion said in the filing its cash balance would only be enough to see the company through August 2023 in terms of funding operations. 

The new license lasts three years till September 2026 "with the option of four 1-year extensions for a total of seven full years until September 13, 2030", Zion said. 

"This license is a major endorsement from the State of Israel and affirms our longstanding commitment to unlocking Israel’s onshore energy potential", chief executive Rob Dunn said in a statement. 

This is Zion's seventh license throughout its 23 years as a company, trading on the OTCQX stock exchange in the USA, where it is based in Dallas, Texas, but operating in Israel. 

"This is not an extension but a new license spanning seven years, providing ample time for further exploration and development", Zion vice-president and managing director Israel Branch said in an earlier media release May 18. 

Zion conducts exploration using its own drilling rig. In 2020 it incorporated two wholly owned subsidiaries, one for drill ownership and the other for managing drilling contracts. 

To contact the author, email jov.onsat@rigzone.com