Zion Oil & Gas: could Israel’s #1 shit co finally take off?

Take The Metals Company (ISIN CA87261Y1060, Nasdaq: TMC), for example. Featured in a Weekly Dispatch back in January 2025 as a written-off, controversial deep-sea exploration company, the stock has since surged 10x – and its warrants? A staggering 25x.

Similarly, earlier in June 2025, the Weekly Dispatches carried a long feature titled "'Shit' mining companies – the next stellar performers?" The four stocks highlighted in that piece have climbed 50%, 75%, 100% and 500%, respectively.

So what about energy-related shit cos? Could similar breakout opportunities be lurking there?

Hope springs eternal

Zion Oil & Gas (ISIN US9896961094, US OTC: ZNOG) is headquartered in Dallas, Texas, but its oil and gas exploration efforts are focused onshore in Israel.

The company's history is slightly bonkers, which is one of the reasons it deserves to be featured as a proper shit co.

It all began in the early 1980s, when John Brown, a former US marketing executive, met a book author who claimed that the Bible gave specific clues pointing to oil deposits in Israel. The Book of Deuteronomy referencing "the land of Joseph and the blessings of the deep that lies beneath" made the duo believe this could mean oil.

Almost two decades of research later, Zion Oil & Gas was founded to explore for oil in the State of Israel, based on the idea of "geology confirming theology".

What followed would be worthy of a TV drama or a novel, and it's impossible to do it full justice here. A few highlights include:

• An American TV evangelist helping to place an initial share issue among his followers.

• The discovery of a puddle of oil (though not more than a puddle).

• Countless subsequent fundraising rounds. By the time I briefly slagged off mentioned the company in a 2019 research report, it had raised (and blown through) around USD 200m in equity, with not much to show for it.

Back in 2019, I warned against investing. By late 2024, the stock had lost 95% of its value.

Zion Oil & Gas.

Incredibly, since hitting its all-time low of 3 cents in autumn 2024, the stock has been doing quite well. Even though the oil price is down 22% since then, the share price of Zion Oil & Gas has increased by up to 9x from its record low. It has since come off its one-year high, but it's still trading at 5x the level of a year ago. Notably, it's done so without much media reporting to go with it.

Could the dream of discovering onshore oil and gas in Israel finally be about to become real?

With its biblical roots, Zion Oil & Gas has inevitably been the butt of jokes for years.

Back in 2013, a scathing article from NPR reported that "three Old Testament scholars consulted for this report say the ancient Hebrew word in Deuteronomy is olive oil, not petroleum".

Source: NPR, 27 November 2013.

In 2018, the Financial Times weighed in. The headline said it all: "Eighteen years, five wells, output zero: Zion's long quest for oil in Israel".

In the godless era we live in, it's easy to poke fun at the company's unique approach and its flock of faith-based investors. Then again, are the countless professional investors who fell for the nonsense commonly known as "ESG" really any different? Also, isn't it usually the crazies who change the world?

You do have to wonder: why did the share price of Zion Oil & Gas perform so well over the past 12 months – especially during a period when oil stocks in general were under severe pressure due to the falling oil price?

As the company makes clear on its website, despite its biblical theme, its oil and gas exploration activities are based on modern science. Zion Oil & Gas has conducted the same types of geological and geophysical studies and surveys that any other exploration company in the sector would carry out.

It has also learned from its mistakes – moving on to other prospects when exploration efforts proved unsuccessful. In 2023, the company signed an agreement with the Israeli government to explore a different part of the country. Its latest exploration license, the "Megiddo Valleys License 434", covers 302 square kilometres (75,000 acres) in the valley of the same name.

Getting drilling underway at a time when Israel was experiencing war and international boycotts came with its own challenges – but drill they did! The programme got underway in earnest in October 2024, which also happened to mark the low point of the share price.

Since then, Zion Oil & Gas has reported that gas flowed to the surface during drilling. According to the company, the find "showed characteristics consistent with a productive reservoir" and the team is now "assessing the well's production potential".

A quarter of a century later, could Zion Oil & Gas finally be about to deliver for its shareholders?

What my research concluded

The company latest update for shareholders came in the form of a 22-minute recorded call with management. These regular recordings, along with accompanying press releases, tend to focus on technical details, and are, for that reason, not easy to interpret. Zion Oil & Gas does offer an information package that can be delivered by post, but it does not provide a conventional investor presentation on its website. Anyone looking to analyse the company in depth has to dig through a lot of material, both across the website and from external sources.

There is no brokerage research on the company that I'm aware of. Seeking Alpha featured the occasional article, but the last one appeared in 2022. Zion Oil & Gas lost its Nasdaq listing in 2020 after its share price lingered in penny stock territory for too long. Management declined to pursue a reverse split, arguing that the lower-cost OTC market was sufficient for its needs.

Cynics would point out that a rather large percentage of the company's press releases and public updates revolve around its seemingly never-ending share issues. Indeed, Zion Oil & Gas has issued new shares so frequently that one could argue its actual business is the issuance of shares. Critics have highlighted its high overhead and the millions of dollars paid to management over the years.

Oh, and yes – there was an SEC investigation at one point. Though, to be fair, it did not lead to any enforcement action.

And yet, despite all of this, the company remains worth USD 190m based on the current share capital.

Israel did discover OFFSHORE oil and gas reserves that no one believed in – resources that have since generated billions for investors. These energy deposits, deep beneath the Mediterranean seabed, were only found after 40 years (!) of failure by companies like British Gas Group. In the end, it took two ambitious men, new technologies, and a different approach to finally crack the code. The resulting energy supply has been a gamechanger for the country – potentially enough to power Israel for nearly half a century.

Backers of Zion Oil & Gas hope that something similar is now in the making at their company.

Does it stand a chance?

There is always a chance the company strikes it big, but current indications do not (yet) suggest a major find.

Given its quirky backstory, Zion Oil & Gas will likely continue to attract interest from faith-based investors.

But for those looking to bet on the next five- or ten-bagger rising from the rubble of a beaten-up resource stock… there are probably better shit cos out there.

(Note to readers: if you know of any other mining and resource shit cos that should I follow, please let me know!)

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