Current Report Filing (8-k)
August 17 2018 - 6:04AM
Edgar (US Regulatory)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
August 16, 2018
Date of Report (Date of earliest event reported)
Zion Oil & Gas, Inc.
(Exact name of registrant as specified in
its charter)
Delaware
(State or other jurisdiction of incorporation)
001-33228
(Commission File Number)
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20-0065053
(IRS Employer Identification No.)
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12655 North Central Expressway, Suite 1000,
Dallas, TX 75243
(Address of Principal Executive Offices)
Registrant's telephone number, including
area code: 214-221-4610
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement communications pursuant to 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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the Securities
Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company
☐
If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Zion Oil & Gas
Confirms Active Petroleum System in Megiddo-Jezreel #1 Well In Israel
Additional Testing
is Needed to Evaluate Reservoir Potential
DALLAS and CAESAREA, Israel, August
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?
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1.
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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.
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2.
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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.
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3.
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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.
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4.
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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.
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5.
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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.
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Is the
MJ #1 a Successful Well?
This is a
question that can be answered in a number of ways:
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1.
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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:
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a.
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A
very favorable Thermal Gradient has been shown to exist;
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b.
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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
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c.
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There
are multiple identifiable targets and objectives that have been observed based on drilling,
testing and petrophysical analysis, which we have yet to test.
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2.
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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.
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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:
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1.
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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.
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2.
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We
continued to observe Shabbat, which limited testing operations from 7:00 am Sunday morning
through 7:00 pm Friday evening.
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3.
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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.
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4.
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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.
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5.
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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.
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What are
the Future Plans?
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1.
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We
have gained a tremendous amount of geological knowledge, but there are still a lot of
unresolved questions that need further evaluation:
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a.
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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?
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b.
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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.
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c.
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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.
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2.
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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.
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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
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized.
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Zion Oil & Gas, Inc.
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Date: August 16, 2018
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By:
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/s/ Dustin L. Guinn
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Dustin L. Guinn
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Executive Vice-Chairman/President/Chief Operating Officer
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4
Item 9.01
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Financial Statements and Exhibits.
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(d) Exhibits
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized.
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Zion Oil & Gas, Inc.
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Date: August 16, 2018
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By:
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/s/ Dustin L. Guinn
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Dustin L. Guinn
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Executive Vice-Chairman/President/Chief Operating Officer
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