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expense, net for the three and six months ended June 30, 2022 were $101,000 and $121,000, respectively, compared to $45,000 and $268,000,
respectively, for the three and six months ended June 30, 2021. The expenses in this category are comprised of foreign currency exchange
costs, primarily the New Israeli Shekel (NIS) to the US dollar, and financial expenses/income. Overall, for the 6 months ended June 30,
2022, total expenses in this category are $147,000 lower due to the relative strengthening of the USD to the NIS during 2022. Net Loss. Net loss
for the three and six months ended June 30, 2022 was $2,597,000 and $4,763,000 compared to $4,056,000 and $6,616,000 for the three and
six months ended June 30, 2021. 42 Liquidity and Capital Resources Liquidity is a measure of
a company’s ability to meet potential cash requirements. As discussed above, we have historically met our capital requirements through
the issuance of common stock as well as proceeds from the exercise of warrants and options to purchase common shares. Our ability to continue as
a going concern is dependent upon obtaining the necessary financing to complete further exploration and development activities and generate
profitable operations from our oil and natural gas interests in the future. Our current operations are dependent upon the adequacy of
our current assets to meet our current expenditure requirements and the accuracy of management’s estimates of those requirements. Should
those estimates be materially incorrect, our ability to continue as a going concern will be impaired. Our financial statements for
the three and six months ended June 30, 2022 have been prepared on a going concern basis, which contemplates the realization of assets
and the settlement of liabilities and commitments in the normal course of business. We have incurred a history of operating losses
and negative cash flows from operations. Therefore, there is substantial doubt about our ability to continue as a going concern. At June 30, 2022, we had approximately
$5,755,000 in cash and cash equivalents compared to $4,683,000 at December 31, 2021, which does not include any restricted funds. Our
working capital (current assets minus current liabilities) was $6,004,000 at June 30, 2022 and $3,303,000 at December 31, 2021. As of June 30, 2022, we provided
bank guarantees to various governmental bodies (approximately $1,218,000) and others (approximately $63,000) in respect of our drilling
operation in the aggregate amount of approximately $1,281,000. The (cash) funds backing these guarantees are held in restricted interest-bearing
accounts in Israel and are reported on the Company’s balance sheets as fixed short-term bank deposits restricted. During the six months ended
June 30, 2022, cash used in operating activities totaled $3,424,000. Cash provided by financing activities during the six months ended
June 30, 2022 was $12,994,000 and is primarily attributable to proceeds received from the Dividend Reinvestment and Stock Purchase Plan
(the “DSPP” or the “Plan”). Net cash used in investing activities such as unproved oil and gas properties, equipment
and spare parts was $8,448,000 for the six months ended June 30, 2022. During the six months ended
June 30, 2021, cash used in operating activities totaled $2,966,000. Cash provided by financing activities during the six months
ended June 30, 2021 was $13,674,000 and is primarily attributable to proceeds received from the Dividend Reinvestment and Stock Purchase
Plan (the “DSPP” or “Plan”). Net cash used in investing activities such as unproved oil and gas properties, equipment
and spare parts was $15,044,000 for the six months ended June 30, 2021. Accounting standards require management to evaluate our ability to
continue as a going concern for a period of one year subsequent to the date of the filing of this Form 10-Q. We expect to incur additional
significant expenditures to further our exploration and development programs. While we raised approximately $533,000 during the
period July 1, 2022 through August 8, 2022, we will need to raise additional funds in order to continue our exploration and development
activities in our license area. Additionally, we estimate that, when we are not actively drilling a well, our expenditures are approximately
$600,000 per month excluding exploratory operational activities. However, when we are actively drilling a well, we estimate an additional
minimum expenditure of approximately $2,500,000 per month. The above estimates are subject to change. Subject to the qualifications specified
below, management believes that our existing cash balance, coupled with anticipated proceeds under the DSPP, will be sufficient to finance
our plan of operations through November 2022. The recent outbreak of the
coronavirus has to date significantly disrupted business operations and resulted in significantly increased unemployment in the general
economy. The extent to which the coronavirus impacts our operations, specifically our capital raising efforts, as well as our ability
to continue our exploratory efforts, will depend on future developments, which are highly uncertain and cannot be predicted with confidence,
including the duration of the outbreak, new information which may emerge concerning the severity of the coronavirus and the actions to
contain the coronavirus or treat its impact, among others. No assurance can be provided
that we will be able to raise the needed operating capital. 43 Even if we raise the needed
funds, there are factors that can nevertheless adversely impact our ability to fund our operating needs, including (without limitation),
unexpected or unforeseen cost overruns in planned non-drilling exploratory work in existing license areas, the costs associated with extended
delays in undertaking the required exploratory work, and plugging and abandonment activities which is typical of what we have experienced
in the past. The financial information
contained in these consolidated financial statements has been prepared on a basis that assumes that we will continue as a going concern,
which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. This
financial information and these consolidated financial statements do not include any adjustments that may result from the outcome of this
uncertainty. Off-Balance Sheet Arrangements We do not currently use any
off-balance sheet arrangements to enhance our liquidity or capital resource position, or for any other purpose. Recently Issued Accounting Pronouncements The Company does not believe
that the adoption of any recently issued accounting pronouncements in 2022 had a significant impact on our financial position, results
of operations, or cash flow. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk is a broad term
for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes may be the result of various
factors, including interest rates, foreign exchange rates, commodity prices and/or equity prices. In the normal course of doing business,
we are exposed to the risks associated with foreign currency exchange rates and changes in interest rates. Foreign Currency Exchange
Rate Risks. A portion of our expenses, primarily labor expenses and certain supplier contracts, are denominated in New Israeli Shekels
(“NIS”). As a result, we have significant exposure to the risk of fluctuating exchange rates with the U.S. Dollar (“USD”),
our primary reporting currency. During the period January 1, 2022 through June 30, 2022, the USD has fluctuated by approximately 12.5%
against the NIS (the USD strengthened relative to the NIS). By contrast, during the period January 1, 2021 through December 31, 2021,
the USD fluctuated by approximately 3.3% against the NIS (the USD weakened relative to the NIS). Continued strengthening of the US dollar
against the NIS will result in lower operating costs from NIS denominated expenses. To date, we have not hedged any of our currency exchange
rate risks, but we may do so in the future. Interest Rate Risk. Our
exposure to market risk relates to our cash and investments. We maintain an investment portfolio of short-term bank deposits and money
market funds. The securities in our investment portfolio are not leveraged, and are, due to their very short-term nature, subject to minimal
interest rate risk. We currently do not hedge interest rate exposure. Because of the short-term maturities of our investments, we do not
believe that a change in market interest rates would have a significant negative impact on the value of our investment portfolio except
for reduced income in a low interest rate environment. At June 30, 2022, we had cash, cash equivalents and short-term bank deposits (including
restricted deposits) of approximately $7,074,000. The weighted average annual interest rate related to our cash and cash equivalents for
the three and six months ended June 30, 2022, exclusive of funds at US banks that earn no interest, was approximately .17% and .34%, respectively. The primary objective of our
investment activities is to preserve principal while at the same time maximizing yields without significantly increasing risk. To achieve
this objective, we invest our excess cash in short-term bank deposits and money market funds that may invest in high quality debt instruments. 44 ITEM 4. CONTROLS AND PROCEDURES We maintain disclosure controls
and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities
Exchange Act of 1934, is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms.
As of June 30, 2022, our chief executive officer and our chief financial officer conducted an evaluation of the effectiveness of our disclosure
controls and procedures. Based on this evaluation, our chief executive officer and our chief financial officer concluded that our disclosure
controls and procedures were effective as of June 30, 2022. Changes in Internal Control over Financial
Reporting There were no changes in internal
controls over financial reporting that occurred during the quarter ended June 30, 2022 that have materially affected, or are reasonably
likely to materially affect, our internal controls over financial reporting. 45 PART II—OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Securities and Exchange
Commission (“SEC”) Investigation As previously disclosed by
the Company, on June 21, 2018, the Fort Worth Regional Office of the SEC informed Zion that it was conducting a formal, non-public investigation
and asked that we provide certain information and documents in connection with its investigation. Since that date, we have fully cooperated
with the SEC on an on-going basis in connection with its investigation. Investigations of this nature are inherently uncertain and their
results cannot be predicted with certainty. Regardless of the outcome, an SEC investigation could have an adverse impact on us because
of legal costs, diversion of management resources, and other factors. The investigation could also result in reputational harm to Zion
and may have a material adverse effect on Zion’s current and future business and exploratory activities and its ability to raise
capital to continue our oil and gas exploratory activities. Litigation From time to time, the Company
may be subject to routine litigation, claims or disputes in the ordinary course of business. The Company defends itself vigorously in
all such matters. However, we cannot predict the outcome or effect of any of the potential litigation, claims or disputes. The Company is not subject
to any litigation at the present time. ITEM 1A. RISK FACTORS During
the quarter ended June 30, 2022, there were no material changes to the risk factors previously reported in our Annual Report on Form 10-K
for the year ended December 31, 2021. ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. MINE SAFETY DISCLOSURES None. ITEM 5. OTHER INFORMATION : None. 46 ITEM 6. EXHIBITS Exhibit Index : 10.2 Extension of New Megiddo 428 License to February 1, 2023 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 under the Exchange Act 31.2 Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 under the Exchange Act 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished only) 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished only) 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) 47 SIGNATURES Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly
authorized. ZION OIL & GAS, INC. (Registrant) By: /s/ Robert W.A. Dunn By: /s/ Michael B. Croswell Jr. Robert W. A. Dunn Michael B. Croswell Jr. Chief Executive Officer Chief Financial Officer (Principal Executive Officer) (Principal Financial and Accounting Officer) Date: August 10, 2022 Date: August 10, 2022 48 N/A N/A NONE 0.01 0.01 0.02 0.03 244032000 248672000 439039000 471946000 On March 21, 2022, the Company extended the expiration date of the Warrants by one (1) year. On September 15, 2020, the Company extended the expiration date of the Warrants by two (2) years. These warrants were issued on May 5, 2022, and on May 17, 2022, the Company extended the expiration date of the Warrants by one (1) year. On December 4, 2018, the Company extended the expiration date of the Warrants by one (1) year. On May 29, 2019, the Company extended the expiration date of the Warrants by one (1) year. These warrants will be exercisable beginning on November 15, 2023 and expire on December 31, 2023. 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WASHINGTON, D.C. 20549 FORM 10-Q MARK ONE ☒ Quarterly Report Pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period ended June 30, 2023 ; ☐ Transition Report Pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 for the transition period from ________ to ________ ZION OIL & GAS, INC. (Exact name of registrant as specified in its charter) Delaware 20-0065053 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 12655 N Central Expressway , Suite 1000 , Dallas , TX 75243 (Address of principal executive offices) Zip Code (214) 221-4610 (Registrant’s telephone number, including
area code) Securities registered pursuant to Section 12(b)
of the Ac Title of each class Trading Symbol(s) Name of each exchange on which registered N/A N/A N/A Indicate by check mark whether the registrant