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Is Zion Oil and Gas a good investment?

Is Zion Oil and Gas a good investment?

To answer if Zion Oil and Gas is a good investment, we need to consider some issues

Zion oil and gas are in the process of preparing to commence sophisticated testing of areas of interest via its MJ-02 well in Israel.

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Zion oil and gas are going to stimulate the rock to try and cause the release of trapped oil.

Given the sophisticated nature of the testing, the equipment needed and the specialist services being brought in from the U.S. this tells me Zion oil and gas probably have already at some stages encountered oil.

But Zion oil and gas have decided not to report their findings.

I might be wrong, and maybe they did not encounter oil – and they did say in their last AGM in 2021 that they would report if they do, soon after they do – but knowing how Zion operate they don’t always do what they say they will do, when investors expect them to release news.

It maybe that Zion don’t want to release news of their oil find because they don’t want to be accused of misleading investors, if for instance the share price would rise a lot and later fall sharply, if then further news clarified what kind of oil reserves there were.

In my mind, Zion did encounter oil in various zones of interest and they are thus pressing ahead with the testing phase.

It makes no sense to test areas that do not show any concrete signs of oil.

We saw the share price rise from around 11 cents to 38 cents, this to me tells me there was insider buying following an oil discovery.

Maybe the crew and family members, friends loaded up on shares following an oil discovery.

And because Zion did not release news, investors were none the wiser therefore did not buy more shares and so the share price fell back again.

I’m only surmising you understand. But I’m trying to use some logic, piecing the parts of what is known together to form a view.

The share price of this OTC stock ZNOG fell also because investors were uncertain whether Zion would be granted a drilling extension following news from Israel’s new government that no new onshore exploration and production licenses would be granted.

But later the ministry of energy extended Zion’s license since it appears the new government’s stance did not affect current license holders.

It is likely two take several weeks if not months to fully test the well. In my mind if there is oil, and if Zion’s operations can get it to flow, a good result would be 5,000 barrels of oil per day.

This would then justify Zion oil and gas to drill another well in another location within its license area.

Zion does have the advantage of the 3D data it gathered from 3D testing of part of its license area. It could always 3D test other parts of its license.

But again, I think at this stage Zion oil and gas needs to produce oil from MJ-02 and in good quantities to justify further 3D testing because it has already 3D tested a sizable area of its license.

And to justify drilling another well Zion needs to show investors how such a decision can be justified, moreover if it seeks further funding.

As it is with the share price at around 11 cents, and investors unsure of whether Zion oil and gas have a future beyond MJ-02, something will have to give, for Zion to regain investor confidence.

If oil has been found proper, and Zion go on to get that oil flowing so they can turn their MJ-02 well into a producer then given the sizable following Zion oil and gas has, I see no issues with future funding.

Regarding the 800 million new shares, Zion stated they would only add these to the existing pool of shares when the share price rises.

If Zion can produce oil in decent quantities from MJ-02 and plan to drill another well, my target share price would be $10.

If the results of testing the MJ-02 well are fruitful then Zion oil and gas would be a good investment. At the current price it’s a 50/50 gamble, either they succeed or they do not.

If the former then the upside is potentially massive. Is it worth taking a chance investing in Zion oil and gas?

Well whatever your decision, you’re getting good value if you buy shares now, because others have bought Zion oil and gas stock at a lot higher share price, even around $1, thus you would be getting a massive discount, and most of the discount has been caused by fear and uncertainty.

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