Zion O&G signed a Memorandum of Understanding (MoU) with Aladdin Middle East.
The MoU outlines Zion's plan to establish a subsidiary, tentatively named Zion Drilling, Inc., which will purchase AME's 2,000 horsepower drilling rig (currently located at Zion's Ma'anit-Rehoboth #2 wellsite, in Israel) in exchange for an initial payment of US $7.0 million and a series of US $1.0 million additional payments that are anticipated to coincide with Zion's drilling of seven (7) additional wells in Israel. Each of these payments is to be funded by Zion Oil & Gas, Inc. The MoU provides that Zion Drilling, Inc. will be 51% owned by Zion Oil & Gas and 49% owned by AME. AME will be responsible for the daily drilling operations of Zion Drilling, Inc.
Zion's Founder and Chairman, John Brown, said, "The signing of the MoU with AME marks a significant milestone in the life of Zion Oil & Gas. We are looking forward to establish Zion Drilling, Inc. as this will help us to drill as many wells as it takes, in order to recover the 'treasures of the deep that lie beneath.'" (Deut. 33:13-16)
Zion's Chief Executive Officer, Richard Rinberg, noted, "By establishing Zion Drilling, we will clearly demonstrate our ability to continue to drill wells in Israel without dependence on any outside third party. We will have secured permanent control of a drilling rig for our planned future operations and consequently also raised Zion Oil & Gas' exploration business to a completely new level. We remain excited about the prospect of recovering hydrocarbons on the Ma'anit structure and on our other license and permit areas, especially due to the recent publication of a report by the U.S. Geological Survey (USGS), containing their assessment that there may be 1.7 billion barrels of recoverable undiscovered oil in the Levant Basin. Zion's exploration rights fall within the area of the Levant Basin."
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