Zion Oil & Gas, Inc’s geological team recently completed a year-long study of the deep Permian horizons on the company's Joseph and Asher-Menashe Licenses. The resulting 'Permian Report' identified a Permian drilling prospect on the Ma'anit structure on Zion's Joseph License.

On October 29, 2007, Zion submitted the Permian Report to the Israeli Petroleum Commissioner. The Report is a 43-page technical geological report and prospect presentation, in which the Company analyzes the hydrocarbon potential in drilling the planned Ma'anit-Rehoboth #2 well to Permian targets, in addition to the Triassic targets drilled in Zion's Ma'anit #1 well.

In the Report, Zion notes and analyzes the striking similarity between the late Permian Arqov formation in Israel, into which Zion plans to drill the planned Ma'anit-Rehoboth #2 well, and the late Permian Khuff formation in the Persian Gulf region. The Khuff formation is the main reservoir for the prolific off-shore gas bearing North Field in Qatar and South Pars field in Iran.

It should be emphasized that, notwithstanding the similarities between the Permian Arqov formation in Israel and the Permian Khuff formation in the Persian Gulf region, the planned Ma'anit-Rehoboth #2 well is "wild-cat" exploratory test well insofar as the targeted Permian horizons are concerned. Until the well is drilled and its results analyzed, the gas reservoirs found in the Khuff fields of the Persian Gulf should not be assumed to be present in the Arqov formation that appears to underlie Zion's Joseph License. The comparisons presented in Zion's Permian Prospect were presented to the Israeli Petroleum Commissioner solely as part of Zion's overall geological and economic analysis justifying the drilling of a "wild-cat" test well on the Ma'anit structure to Permian targets.