DALLAS and CAESAREA, Israel, Aug.
16, 2018 /PRNewswire/ -- Zion Oil & Gas, Inc.
(NASDAQ: ZN) announces that it is completing the initial
testing program of its primary zones located within the
Triassic-age Mohilla Formation of the Megiddo-Jezreel #1 (MJ #1)
well.
Zion's President and Chief Operations Officer, Dustin Guinn, makes the following statement
concerning the MJ #1 well:
Zion has a sincere desire to be
transparent in the details of our operations with our shareholders,
for a number of reasons. Most of our shareholders share a
passionate alignment with the vision of Zion that extends beyond
financial success. We view our shareholders as partners in
this journey, which has been difficult to say the least. As a
result, this operations update will be longer and more detailed
than most and will be subdivided to try to answer some of the most
common questions.
Did We Find Oil?
- We encountered oil at a depth of between 16,415 ft and 16,500
ft during drilling operations, when we circulated bottoms up. The
oil was separated and tested internally and externally through our
mudlogging company's chromatograph, indicating "Light Oil" based on
the chemical composition of the analyzed stream.
- Third party petrophysical analysis of our open hole logs
continues to suggest that oil is located in this zone as well as
other zones of interest.
- While testing the zone between 16,415 ft and 16,500 ft, we
perforated the casing and performed a small acid stimulation
job. Upon circulation of the acid out of the wellbore, minor
amounts of oil were observed while taking small samples of the
fluid being circulated out of the wellbore.
- Following the circulation of the fluid after the stimulation
job, we ran back in the hole and began to swab the well to attempt
to see if the well would flow. As of the writing of this
update, when swabbing, the data confirms the well artificially
flows at a rate of approximately 90-110 barrels of fluid per day in
the zone between 16,415 and 16,500 ft. We are still swabbing
completion fluid as of this writing and the results of the well are
inconclusive at this point as to whether the well will establish
natural flow and what the volumetric contribution of oil and water
will be.
- We remain hopeful but do not yet know if there is producible
oil in commercial quantities within our deep primary zones, and
there are still many questions yet to be answered. However,
we can say with reasonable confidence that the formation is tight
with low permeability and has few natural fractures. This is
not uncommon, and often times requires advanced stimulation
techniques to help determine the well's commercial potential.
Is the MJ #1 a Successful
Well?
This is a question that can be
answered in a number of ways:
- In considering the success rate of wildcat wells, with little
to no offset data, in our opinion the MJ #1 could be considered a
geologic success as follows:
- A very favorable Thermal Gradient has been shown to exist;
- The MJ #1 has successfully demonstrated the existence of an
active petroleum system. Oil has been encountered which we believe
confirms that mature source rocks have expelled hydrocarbons that
have migrated into a trap which was drilled by MJ #1; and
- There are multiple identifiable targets and objectives that
have been observed based on drilling, testing and petrophysical
analysis, which we have yet to test.
- Is the well commercially successful with the information that
we currently have, as of the writing of this update, during the
testing of the deepest zones of interest? The answer is
no. The drilling and testing on this well was much more
costly than we expected, and as of today cannot be considered
commercially successful.
What Caused Delayed Testing
Results?
Testing of the MJ #1 well has
taken longer than anticipated for a number of reasons, some of
which we wish to outline:
- We made the decision to test this well only during daylight
hours. Given that it was a wildcat well, we decided to only
operate during daylight hours and emphasize safe operations over
time and cost.
- We continued to observe Shabbat, which limited testing
operations from 7:00 am Sunday
morning through 7:00 pm Friday
evening.
- In our opinion, the most impactful operational delay resulted
from what appears to have been ineffective casing guns and charges,
sourced locally in Israel and
initially used to perforate all the zones. We purchased
additional casing guns and charges from the United States at the commencement of
testing, which fortunately, allowed us to re-perforate all the
zones of interest to achieve injectivity and properly stimulate the
well.
- The primary zones we have been testing are all located at
depths greater than 16,000 feet. Every time we had to run in
the hole and out of the hole took, on average, four days.
- Every time we wanted to isolate a particular zone to test, we
had to install an isolation tool called a packer, which contains
rubber elements. Due to the very high well temperature, these
packers would only last, on average, approximately five days.
When they failed, we had to pull the pipe out of the hole and
replace the packer, which added, on average, four days.
What are the Future Plans?
- We have gained a tremendous amount of geological knowledge, but
there are still a lot of unresolved questions that need further
evaluation:
- Have we swabbed enough completion fluid and formation fluid
from zones 16,415-16,500 ft and 16,080 – 16,215 ft to effectively
allow for the formation to naturally flow, and will the
encouragement of that natural flow, if established, allow for
commercial amounts of oil to flow?
- Drilling analysis and petrophysical analysis suggest that there
may be more potential oil-bearing zones above the Triassic
boundary, which was internally picked at approximately 15,175
ft. Zion chose to focus on the Triassic because of the
regional success in Givot Olam's Meged
Field. Subject to raising adequate financial
resources, of which no assurance can be provided, we plan to
continue with testing of the multiple zones of interest higher in
the well.
- We know that the primary zones located within the Triassic-aged
formations have proven to have low permeability and few natural
fractures. If the questions above continue to provide answers
that suggest producible oil, advanced stimulation techniques could
be used to help create an environment of higher permeability and a
fracture regime more conducive to commercial flow rates.
- If answers to the foregoing questions above are positive, and
we raise the needed financial resources, we plan to acquire
additional focused seismic data to help guide potential field
development and continue with Zion's vision to help make
Israel energy independent.
Management, along with all of our
staff, want to sincerely thank you for your continued
support. This mission has been one of the most difficult
challenges we have undertaken, and we are not done yet. We
also recognize that we are completely shareholder funded and as a
result, this is your company. There is so much left to do,
and it is an honor to represent our shareholders in this
mission.
There will be more updates to come
as we know there are many more questions regarding the
administration and regulatory issues facing Zion that many of you
have.
"But everything exposed by the light becomes
visible and everything that is illuminated becomes a light"
Ephesians 5:13
"….The LORD has broken through my enemies
before me, like a breakthrough of water"
2 Samuel 5:20
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 or tested, the presence or recoverability of
hydrocarbons, operational risks in testing and well completion,
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.
Contact Info:
Zion Oil & Gas, Inc. (NASDAQ: ZN)
12655 North Central Expressway, Suite 1000, Dallas, TX 75243
Andrew Summey
Telephone: 888-891-9466
Email: andrew.summey@zionoil.com
www.zionoil.com
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SOURCE Zion Oil & Gas, Inc.