Zion oil and gas—the devil is in the details
What do Zion investors know?
Investors knew, or should have been aware of the fact that Zion oil and gas was having a hard time raising money.
After a short timespan, ZNOG offered a more attractive discount for their warrants, given that a previous offer was unrealistic, the price was higher than the then current share price.
Thereby, Zion oil and gas did not generate a good response to their offers.
Zion money issues
I suspected then that they were struggling to raise money. And of course they were not in a position at that time to deliver news to investors to persuade them to dig deep into their pockets.
Zion’s 3D and how MJ-02 came about
Investors and potential investors, those sitting on the fence were hoping for news relating to the 3D results – at least connected to the MJ-02 pad area, which Zion later drilled, now a well – of MJ-02 well is on the same site as Zion’s last well drilled which is MJ-01, that they later had cemented up.
It’s telling that Zion would cement MJ-01 if the results of the 3D data were so promising.
Zion claimed that they could not release news relating to the 3D because they did not want to give away information to their competitors, even though there are hardly any in Israel, let alone the area in which they operate.
On that note, given the Israeli ministry of energy stated they are not going to issue any further new exploration or onshore production permits relating to its petroleum law following the instalment of Israel’s new government.
I don’t see any reason why Zion would not now spill the beans about the results of their 3D.
In any case, there was no big share buying following their 3D operations, and subsequent interpretations, as one would expect had there been any good signs of oil.
The biggest issue in my mind concerning the 3D, is wanting to know why Zion decided to drill on the same site as MJ-01 rather than drilling in an area where the 3D was conducted which may of shown better results.
For Zion to drill on the same site as MJ-01 tells me either that that site is the best site, or that the 3D failed and Zion decided to drill on the same site for the sake of convenience.
I’m minded of the fact too that following MJ-01 the then CEO left, or was pushed out of the company.
If another well on the same site was going to produce better results, i.e. free flowing oil, then he would have likely remained CEO of Zion.
Okay, the 3D was conducted after he had left, but still, if results from MJ-01 were that great, that informed Zion oil and gas, the need to drill deeper, surely before abandoning that MJ-01 well, Zion would have bought another rig then and moved the old rig, replacing it with the new rig, that could drill deeper, while the MJ-01 well was still open.
I think therefore that investors should not view the 3D as a carrot, rather that that enticement has rotted away.
Given that the petroleum right holder of a license area is required to obtain all other necessary approvals, to acquire land needed for petroleum purposes.
For the company to drill, the Israeli government would have likely only did this if, and only if the 3D results demonstrated overwhelmingly that, a particular location showed signs of there being a high probability of oil production.
Is Zion a good investment at this stage?
The demeaner, attitude and vibes from Zion’s BOD and from the energy ministry, following inquiries does not give me any confidence that MJ-02 is a good investment proposition.
I was more optimistic at the rig purchasing stage, and while Zion were drilling, up until about 3/4 of the way through drilling.
However, at this stage, given all what is known, I have lost confidence in Zion oil and gas’ ability to come up with any good news.
ZNOG share price action
The few share price rises following OTC transition were due to pump and dumps.
I have matched up three pump and dumps relating to ZNOG, (including the $1.74 share price spike), to a penny stock trader who has many thousands of followers.
The dates of the share price rises correlate to his tweets on Twitter, and relate to his email marketing.
In this respect, I cannot say that the share price rises had been due to any oil encounters, and the $1.74 share price was too early into MJ-02 operations to be connected to any oil encounter.
Where does this leave current Zion investors?
Well, what we see now, and should have known many months ago, is that Zion oil and gas are having great difficulties raising money, and therefore keeping this ship afloat.
And of course the BOD knew this day would come.
At this stage, if Zion oil and gas had any good news to report, I’m pretty confident the BOD would be shouting from the roof tops.
Are insiders buying Zion oil and gas shares?
There is no big insider buying, no big investors taking a position in Zion oil and gas, and this is worrying.
If Zion oil and gas had an oil encounter proper, pre testing, I would expect back door deals to have been struck, and or, word would have leaked, so that big investors would jump on board.
Because there are no big investors, or hot interest in this stock, Zion are desperate to raise money to keep operations alive.
However, there’s a fine line, since at the same time, Zion cannot produce any juicy carrot re oil encounter or testing results related to potential reserves or production, in order to raise that money from its current investors.
Zion cannot even show fools gold, because they were bashed with a legal case following MJ-01 reports. So any news now in relation to MJ-02 has to be accurate.
They have employed the services of oil testing, and we don’t know at what stage they are at with testing operations, but we do know that the share price has not moved north, therefore it’s safe to assume no oil has been encountered, i.e. no free flowing oil, and/or no clear signs of trapped oil for that matter.
In the event, if Zion drill an oil or gas discovery in their license area, current Israeli law entitles them to convert the relevant portions of their license to a 30-year production lease, extendable to 50 years, subject to compliance with a field development work program and production.
Can Zion oil and gas survive?
So you would think that given Zion needs money now, that if at this stage, they had encountered oil and or natural gas, that they would have informed investors, released proper news, and not the faith blaming emails we have read from John Brown.
Is this a case of Zion putting up or shutting up operations and then John Brown writing to everyone that a lack of faith changed God’s mind?
Who knows, but as aforementioned, at this stage given Zion are in trouble for money, unless they produce substantial good news, we could see them closing down operations and walking off to their luxury houses and yachts with tails between their legs and massive smiles on their faces.
Because whatever happens, the BOD are winners at the expense of their investors.
Have Zion oil and gas found any significant oil?
In the last AGM, the CEO did tell investors that at first sign of oil he would inform investors.
He has not done that, therefore what can investors assume… that no oil was found while drilling MJ-02? I think it is thus reasonable to conclude this.
And given the current share price, I think that even if the CEO was lying to investors, the share price tells the truth or is at least a good indicator of the reality of the situation.
I can’t see how Zion could hide an oil encounter, and moreover at this stage when it needs money to continue with operations.
Therefore, I have to conclude that no oil or natural gas has been discovered.
So what’s the gamble then regarding Zion oil and gas?
That testing will change this?
Unlikely given how deep Zion drilled and the rigs ability to drill sideways.
It’s thus not looking good right now.
The only hope is that exploding the rocks might cause the free flowing of oil, but that assumption is based upon there being oil there in the first place.
Therefore fracturing the rock, and/or fracking using liquids is a futile endeavour if there is no oil.
I’m not sure if the testing of the MJ-02 includes, oil and gas separation facilities and storage tanks.
It’s not clear by looking at the videos and photos of the site, (on Zion’s website and Twitter/Facebook accounts) and I can’t read anywhere where Zion have reported this.
If MJ-02, or any other well Zion drilled was commercially productive at the current crude oil prices, this would be good for Zion’s income.
However, that’s only if they can encounter oil that can be made commercial and in such quantities that would warrant continuing operations of one or more future drilled wells.
I do not believe Zion oil and gas have a strong enough faith based following that would throw enough money at Zion to keep it as a going concern.
Not unless there were a multimillionaire or billionaire, who had faith enough to transfer 5 or 10 million dollars or more Zion’s way. And even if Zion could raise say 5, 10 or 20 million dollars:-
What’s the point (save to fill their own pockets) if there is no oil from MJ-02 as there was not from MJ-01, and previous wells.
There would have to be a major material fact changing for Zion to justify drilling a further well in another location.
Surely then, Zion would be merely drilling for the sake of it, (for the sake of their own benefits) thus keeping investor’s hopes alive, as they have been, leading up to this point.
Will Zion oil and gas raise enough money they need?
Zion are on a begging mission, (or will be soon) and dilution is highly likely, (heavy dilution:- so much so you will not know if you are drinking orange juice, water or John Brown’s patronising warm p*ss pouring over your back while he tells you its raining and that you should keep investing).
From the current 12 cents share price, there’s a long way down to go, given Zion can add many millions of shares, (it already has 800,000,000 ready to be added) it claimed it would not in it’s last AGM, unless they stated, “the share price rose significantly”.
Will Zion oil and gas resort to diluting its shares?
Zion could invent 1 to 2 billion more shares. And maybe even more than this following the dumping of the 800 million new shares on this, as I now view it, a hopeless stock.
Dilution maybe Zion’s last hope before it finally admits defeat. But the longer they keep even a small spark of hope alive, the more they themselves profit.
Since thus, the share price has already crashed, albeit from the $1.74 pump and dump, therefore are Zion about to go back on their word out of sheer desperation and not only add the 800m new shares, but are planning on adding a few billion more thereafter?
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