Zion Oil update

4 February 2011 – Operations Update

Dear Shareholder and/or Friend of Zion

Since my previous update to you, during the past two weeks, Zion has made further notable progress.

We have now drilled the Ma’anit-Joseph #3 well to approximately 16,430 feet and are continuing to drill deeper, as you can read below. If you place eleven Empire State Buildings on top of each other, you will reach, almost exactly, a height of 16,000 feet.

The Ma’anit-Joseph #3 well is already one of the deepest wells ever drilled onshore Israel. Our Exploration Manager, Stephen Pierce, advises that, almost certainly, stratigraphically (i.e. with regard to the age of the sedimentary rocks in the rock strata), in Northern Israel, no-one has ever drilled as deep as our current well has already been drilled.

We believe that, as early as next week, we may begin to approach the Permian geological layer; although we currently project that we won’t reach the well’s target depth until approximately mid-March 2011.