🇮🇱 Zion Oil & Gas Update: September 11, 2024

September 11, 2024

Dear Zion Shareholders and Supporters,

We want to give you an update on the current status of our MJ-01 re-completion project. Our operations have recently faced significant delays due to an unforeseen combination of downhole challenges, logistical constraints and geopolitical factors.

Not surprisingly, after six years of inactivity in a well over three miles deep, the MJ-01 wellbore presents a challenging environment. One major delay that has arisen is our drill pipe separated and a section of it (the “fish”) dropped near the bottom of the hole. This is not an uncommon occurrence with oil and gas drilling operations, but we do need to recover the fish to resume operations. The specialized tools we need are not in Israel, but we believe we have located all of them which then will need to be shipped to Israel, clear Israeli customs and be transported to our rig site.

Another delay arose out of the logistical challenges we face. The ongoing conflict in the region has impacted shipping routes, the timely arrival of necessary equipment and created travel difficulties for our rig crews. Our operations require specialized rig crews who are not available in Israel.

Our rig crews, largely from Hungary and Romania, have worked on our I-35 rig since its manufacture and are very knowledgeable and efficient with its operation. Nevertheless, it is physically demanding and dangerous work which normally requires shifts of crews alternating from the rig site to home and back to avoid physical and mental fatigue which can lead to accidents and injuries. Due to our logistical issues, some of our crew members have already been on-site for 80 consecutive days which poses a heightened safety risk. We, however, have been blessed with no accidents or injuries to date!

An even further delay has been created by many of our rig crew members reaching the limit of their work visas. This requires us to reset visas, which is not a simple process, and it adds another layer of delay and complexity.

We are also mindful of the significance of several upcoming dates in October. The one-year anniversary of the October 7th attacks marks a particularly sensitive period, especially given the ongoing war being fought on several fronts, and the emotional weight this date carries for Israel, alongside the High Holy Days of Rosh HaShanah (Feast of Trumpets), Yom Kippur, (Day of Atonement), Sukkot (Feast of Tabernacles), and Simchat Torah (Celebration of the yearly restart of the reading of the Torah – the first five books of the Bible).

In light of the combination of downhole, logistical, and crew challenges, as well as holidays, and the one-year remembrance of October 7, we have temporarily paused active operations. This is a necessary step to ensure the safety of our personnel and the integrity of the wellbore. We anticipate that once we have the necessary tools and renewed visas for our crews, we can resume operations in Q4 2024. This is, of course, all subject to the realities of the present geopolitical environment. The conflict in Israel, while not directly impacting our operations on a daily basis, creates uncertainties that could affect our schedule at any time.

We remain optimistic that we can resolve our current issues, and we remain committed to moving our project forward as quickly and safely as possible. We will continue to provide updates as new, significant developments arise.

Thank you for your prayers and continued support during this phase of the project.

Robert Dunn
CEO

Monty Kness
COO & Exec VP