text
stringlengths 0
1.95M
|
|---|
was included in previous Zion Oil & Gas filings. We |
acknowledge that these new regulations are likely to increase the expenditures associated with obtaining new exploration rights and drilling |
new wells. The Company expects that additional financial burdens could occur as a result of the Ministry requiring cash reserves that |
could otherwise be used for operational purposes. Capital |
Resources Highlights We |
need to raise significant funds to finance the continued exploration efforts and maintain orderly operations. To date, we have funded |
our operations through the issuance of our securities and convertible debt. We will need to continue to raise funds through the issuance |
of equity and/or debt securities (or securities convertible into or exchangeable for equity securities). No assurance can be provided |
that we will be successful in raising the needed capital on terms favorable to us (or at all). The |
Dividend Reinvestment and Stock Purchase Plan On |
March 13, 2014 Zion filed a registration statement on Form S-3 that is part of a replacement registration statement that was filed with |
the SEC using a “shelf” registration process. The registration statement was declared effective by the SEC on March 31, 2014. |
On February 23, 2017, the Company filed a Form S-3 with the SEC (Registration No. 333-216191) as a replacement for the Form S-3 (Registration |
No. 333-193336), for which the three year period ended March 31, 2017, along with the base Prospectus and Supplemental Prospectus. The |
Form S-3, as amended, and the new base Prospectus became effective on March 10, 2017, along with the Prospectus Supplement that was filed |
and became effective on March 10, 2017. The Prospectus Supplement under Registration No. 333-216191 describes the terms of the DSPP and |
replaces the prior Prospectus Supplement, as amended, under the prior Registration No. 333-193336. On |
March 27, 2014, we launched our Dividend Reinvestment and Stock Purchase Plan (the “DSPP”) pursuant to which stockholders |
and interested investors can purchase shares of the Company’s Common Stock as well as units of the Company’s securities directly |
from the Company. The terms of the DSPP are described in the Prospectus Supplement originally filed on March 31, 2014 (the “Original |
Prospectus Supplement”) with the Securities and Exchange Commission (“SEC”) under the Company’s effective registration |
Statement on Form S-3, as thereafter amended. Please |
see Footnote 3D (“Dividend Reinvestment and Stock Purchase Plan (“DSPP”)), which is a part of this Form 10-Q filing, |
for details about specific stock purchase and unit programs, dates, and filings during the years 2016 through 2023. For the three and six months |
ended June 30, 2023, approximately $1,761,000, and $2,553,000 were raised under the DSPP program, respectively. The $2,553,000 figure |
is net of $173,000 in equity issuance costs to an outside party. For |
the three and six months ended June 30, 2022, approximately $1,566,000, and $12,993,000 were raised under the DSPP program, respectively. The |
warrants balances at December 31, 2022 and transactions since January 1, 2023 are shown in the table be Warrants Exercise Price Warrant Termination Date Outstanding Balance, 12/31/2022 Warrants Issued Warrants Exercised Warrants Expired Outstanding Balance, 6/30/2023 ZNWAA $ 2.00 01/31/2024 1,498,804 - - - 1,498,804 ZNWAD $ 1.00 05/02/2023 243,853 - - (243,853 ) - ZNWAE $ 1.00 05/01/2023 2,144,099 - - (2,144,099 ) - ZNWAF $ 1.00 08/14/2023 359,435 - - - 359,435 ZNWAG $ 1.00 01/08/2024 240,068 - - - 240,068 ZNWAH $ 5.00 04/19/2023 372,400 - - (372,400 ) - ZNWAI $ 3.00 06/29/2023 640,710 - (100 ) (640,610 ) - ZNWAJ $ 1.00 10/29/2023 545,900 - - - 545,900 ZNWAK $ 0.01 02/25/2023 424,225 - (9,050 ) (415,175 ) - ZNWAL $ 2.00 08/26/2023 517,875 - - - 517,875 ZNWAM $ 0.05 09/06/2023 4,376,000 - - - 4,376,000 ZNWAN $ 1.00 05/16/2023 267,760 - (75 ) (267,685 ) - ZNWAO $ 0.25 06/12/2023 174,660 - - (174,660 ) - ZNWAQ $ 0.05 09/06/2023 23,428,348 - - - 23,428,348 ZNWAV $ 0.05 06/28/2023 - 288,500 (167,730 ) (120,770 ) - ZNWAW $ 0.05 07/13/2023 - 199,000 (124,500 ) - 74,500 ZNWAX $ 0.05 07/31/2023 - 818,500 (173,253 ) - 645,247 ZNWAY $ 0.05 09/10/2023 - 17,450 (1,650 ) - 15,800 Outstanding warrants 35,234,137 1,323,450 (476,358 ) (4,379,252 ) 31,701,977 37 Principal |
Components of our Cost Structure Our |
operating and other expenses primarily consist of the followin ● Impairment |
of Unproved Oil and Gas Properti Impairment expense is recognized if a determination is made that a well will not be commercially |
productive. The amounts include amounts paid in respect of the drilling operations as well as geological and geophysical costs and |
various amounts that were paid to Israeli regulatory authorities. ● General |
and Administrative Expens Overhead, including payroll and benefits for our corporate staff, costs of managing our exploratory |
operations, audit and other professional fees, and legal compliance is included in general and administrative expenses. General and |
administrative expenses also include non-cash stock-based compensation expense, investor relations related expenses, lease and insurance |
and related expenses. ● Depreciation, |
Depletion, Amortization and Accreti The systematic expensing of the capital costs incurred to explore for natural gas and oil |
represents a principal component of our cost structure. As a full cost company, we capitalize all costs associated with our exploration, |
and apportion these costs to each unit of production, if any, through depreciation, depletion and amortization expense. As we have |
yet to have production, the costs of abandoned wells are written off immediately versus being included in this amortization pool. Going |
Concern Basis Since |
we have limited capital resources, no revenue to date and a loss from operations, our consolidated financial statements have been prepared |
on a going concern basis, which contemplates realization of assets and liquidation of liabilities in the ordinary course of business. |
The appropriateness of using the going concern basis is dependent upon our ability to obtain additional financing or equity capital and, |
ultimately, to achieve profitable operations. Therefore, there is substantial doubt about our ability to continue as a going concern |
for one year from the date the financials were issued. The consolidated financial statements do not include any adjustments that |
might result from the outcome of this uncertainty. The |
Impact of COVID-19 During |
March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain |
of coronavirus (“COVID-19”). The pandemic significantly impacted the economic conditions in the United States and Israel, |
as federal, state and local governments reacted to the public health crisis, creating significant uncertainties in the United States, |
Israel and world economies. In the interest of public health and safety, jurisdictions (international, national, state and local) where |
we have operations, restricted travel and required workforces to work from home. As of the date of this report, the Company adopted a |
hybrid model whereby many of our employees are working from corporate office two to three days per week and then working remotely two |
to three days per week. While there are various uncertainties to navigate, the Company’s business activities are continuing. The |
full extent of COVID-19’s impact on our operations and financial performance depends on future developments that are uncertain |
and unpredictable, including the duration and spread of the pandemic, its impact on capital and financial markets and any new information |
that may emerge concerning the severity of the virus, its spread to other regions as well as the actions taken to contain it, among others. The |
main area in which Zion has experienced COVID-19’s impact has been in supply chain and/or logistics. We work with several suppliers |
worldwide for the procurement of oil and gas parts, inventory items and related labor for our ongoing operations for the MJ-02 well. |
Production delays, factory shutdowns and heavy demand by oil and gas operators worldwide for spare parts has created some challenges |
in obtaining these items in a timely fashion. Critical |
Accounting Policies Management’s discussion |
and analysis of financial condition and results of operations is based upon our condensed consolidated financial statements, which have |
been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated |
financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities |
and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts |
of revenues and expense during the reporting period. We |
have identified the accounting principles which we believe are most critical to the reported financial status by considering accounting |
policies that involve the most complex of subjective decisions or assessment. 38 Impairment |
of Oil and Gas Properties We |
follow the full-cost method of accounting for oil and gas properties. Accordingly, all costs associated with acquisition, exploration |
and development of oil and gas reserves, including directly related overhead costs, are capitalized. All |
capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit-of-production |
method using estimates of proved reserves. Investments in unproved properties and major development projects are not amortized until |
proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that |
the properties are impaired, the amount of the impairment is included in income from continuing operations before income taxes, and the |
adjusted carrying amount of the unproved properties is amortized on the unit-of-production method. Our |
oil and gas properties represent an investment in unproved properties. These costs are excluded from the amortized cost pool until proved |
reserves are found or until it is determined that the costs are impaired. All costs excluded are reviewed at least quarterly to determine |
if impairment has occurred. The amount of any impairment is charged to expense since a reserve base has not yet been established. A further |
impairment requiring a charge to expense may be indicated through evaluation of drilling results, relinquishing drilling rights or other |
information. Abandonment |
of properties is accounted for as adjustments to capitalized costs. The net capitalized costs are subject to a “ceiling test” |
which limits such costs to the aggregate of the estimated present value of future net revenues from proved reserves discounted at ten |
percent based on current economic and operating conditions, plus the lower of cost or fair market value of unproved properties. The recoverability |
of amounts capitalized for oil and gas properties is dependent upon the identification of economically recoverable reserves, together |
with obtaining the necessary financing to exploit such reserves and the achievement of profitable operations. During the three months ended |
June 30, 2023, and 2022, respectively, the Company recorded $48,000 and nil post-impairment charges. During |
the six months ended June 30, 2023, and 2022, respectively, the Company recorded $93,000 and nil post-impairment charges. The |
total net book value of our unproved oil and gas properties under the full cost method is $16,191,000 and $15,889,000 at June 30, 2023 |
and at December 31, 2022, respectively. Asset |
Retirement Obligation We |
record a liability for asset retirement obligation at fair value in the period in which it is incurred and a corresponding increase in |
the carrying amount of the related long-lived assets. Fair |
Value Considerations We |
follow ASC 820, “Fair Value Measurements and Disclosures,” as amended by Financial Accounting Standards Board (FASB) Financial |
Staff Position (FSP) No. 157 and related guidance. Those provisions relate to the Company’s financial assets and liabilities carried |
at fair value and the fair value disclosures related to financial assets and liabilities. ASC 820 defines fair value, expands related |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.