Zion Oil Is Using Scripture, Science to Draw Investors

Zion Oil & Gas Inc. is using a mix of geophysics and the Bible to attract investors as it seeks to raise as much as $35 million in an initial public offering to finance oil and gas exploration in the Holy Land.

Zion has marshaled geological evidence showing there may be oil or gas under its concession, which runs from south of Nazareth, Israel, where the Bible says Jesus grew up, to the Mediterranean resort of Netanya. Biblical passages bolster the science, said John Brown, Zion Oil’s founder and chairman.

“Israel has no real energy resources and so I prayed that God would give me an opportunity to help Israel with oil,” Brown said in an interview from Zion Oil’s offices in Dallas. “Although most of my vision was based on Scripture, it needed to be supported with good geophysical and geological data.”

The Holy Land has so far produced more prophets than petroleum. Israel, which uses about 132 million barrels of oil a year, has one active oil field that produces about 70 barrels a day, according to Zion’s prospectus. Companies including BG Group have found commercial quantities of natural gas off the coast of Israel and the Palestinian-ruled Gaza Strip in recent years.

Christians such as Brown believe the Bible hints there is oil in Israel and it is their duty to help develop the country.

Zion Oil plans to drill at a site near Kibbutz Ma’anit that was abandoned a decade ago by an Israeli company called Oil Fields after reaching a depth of 7,870 feet, said Philip Mandelker, an Israeli lawyer and Zion’s general counsel. The company intends to drill as deep as 15,000 feet.

“Several drillings have taken place in this region in the past without any major findings,” said Amit Mor, chief executive of consulting firm Eco Energy Ltd. in Herzlya, Israel.

Zion’s initial share sale, approved last month by the U.S. Securities and Exchange Commission, is aimed at retail investors and is being managed by Network 1 Financial Securities Inc. of Red Bank, N.J.

The company has until May 31 to sell at least 1.3 million shares at $5 each and may sell as many as 7 million. The top of the range represents 59% of Zion Oil. Brown now controls 66% of the company and would hold 27% if Zion sells the maximum number of shares, the prospectus says.

Zion had a net loss of $425,039 in the nine months through Sept. 30 and has had losses of $978,944 in the last three years, according to the prospectus.

Some religious scholars believe the area in which Zion plans to drill is the land God set aside for the biblical tribe of Joseph. Brown chose the location in part because of a verse in Deuteronomy that says Joseph will be blessed with the “bounty of the land,” Mandelker said.

“We’ve identified a structural feature roughly parallel to the Israeli coast and developed a concept that this feature became the underlying platform for what appears to be a still intact Triassic-age barrier reef,” he said. “That could provide suitable reservoirs for the accumulation and storage of either gas or oil.”

Givot Olam Oil Ltd., a Jerusalem-based company, has found oil in its concession south of Zion’s and is trying to overcome “technical problems” to pump it, said Chief Geologist Vladimir Steingoltz. The field could produce an average of 476 barrels a day in the first year, declining to 200 barrels a day during the first seven years of operation, the firm’s website reports.

“It’s the same geological area as ours, but in our area a lot more seismological work has been done,” Steingoltz said in a phone interview. “North of it, not so much.”

Zion’s top four managers, including Brown, have signed contracts that guarantee them a total of $720,000 in salary from 2004 through 2008, according to the prospectus.