Zion Oil Purchases Drill Pipe for Ma'anit-Rehoboth Well in Israel

Zion Oil & Gas has contracted for a drill pipe to be used in drilling Zion’s upcoming Ma’anit-Rehoboth-2 well.
The cost of the drill pipe, which is now being prepared for shipment, is estimated at approximately US $1,135,000.

Zion will recover the amount it pays for the drill pipe by a reduction in the payments that it will remit to Aladdin Middle East Ltd (AME) under the Drilling Contract dated September 12, 2008. Zion and AME have recently amended the Drilling Contract to provide for the purchase by Zion of the drill pipe. Under the terms of the Drilling Contract, AME committed to provide a completely refurbished and updated 2,000 horsepower rig and crews to drill Zion’s upcoming Ma’anit-Rehoboth-2 well ‘directionally’ to below 18,000 feet.

The refurbished drilling rig is now being taken apart and packed into custom-made containers in Ankara, Turkey. AME expects to complete the rig crew workers' permitting process soon and is now actively seeking suitable freight ship availability in order to ship the rig from Turkey to Israel in January 2009.

As detailed in its registration statement, Zion is raising funds in order to pursue its planned multi-well drilling program. Depending on actual amounts raised, Zion intends to carry out the following work program: drill Zion’s second well, on Zion’s Joseph License, to the Triassic Formation (down to a depth of 15,400 feet) and/or to the Permian Formation (down to a depth of 18,040 feet), drill a test well on Zion’s Asher-Menashe License to the Triassic Formation and, if appropriate, the Permian Formation and prepare for the drilling of an additional well on either Joseph or Asher-Menashe License.