Zion O&G signed an extension to its drilling contract with Aladdin Middle East, which was originally executed on September 12, 2008. Under the terms of the extended contract, AME has agreed to serve as the drilling contractor for Zion's planned next well, the Ma'anit-Joseph #3 well, located in the area covered by Zion's Joseph License.
The Ma'anit-Joseph #3 well, scheduled to spud in August 2010, is planned to be drilled below 18,000 feet and is targeted at the 'deep' Permian geologic formation. If successful, it will be the first well drilled to the Permian in Northern Israel. The commencement of the drilling program is subject to receipt of various government permits.
Zion's Chief Executive Officer, Richard Rinberg, said, "The signing of the amendment to the drilling contract is another important milestone for Zion. We are very happy to continue working with AME and continue to be impressed by their high quality of service and professionalism. The amended drilling contract will serve as the basis of our relationship with AME for the interim period until we are able to establish our planned drilling subsidiary. As outlined in the Memorandum of Understanding that we signed in April 2010, provided our rights offering is successful, we and AME plan to establish a subsidiary of Zion, tentatively named 'Zion Drilling,' which will purchase AME's 2,000 horsepower drilling rig (currently located in Israel)."
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