Appraisal of the Fair Value of a Certain Block of 200,000 Shares of Common Stock of

As of November 1, 2005

April 28, 2006

Mr. Eugene A. Soltero Chief Executive Officer Zion Oil & Gas, Inc. 6510 Abrams Road, Ste 300 Dallas, TX 75231

Dear Mr. Soltero:

Pursuant to your request, Hill Schwartz Spilker Keller LLC ("HSSK") has appraised the 200,000 shares of common stock in Zion Oil & Gas, Inc. ("Zion" or the "Company") granted to Mr. Richard Rinberg on November 1, 2005 (the subject "Shares"). The purpose of the appraisal was to (i) determine the Fair Value of the Shares on a minority, nonmarketable basis, under the premise of Zion as a going concern, and (ii) address an issue raised by the Securities and Exchange Commission in conjunction with a subsequent initial public offering ("IPO") of Zion's common stock. Specifically, management asked us to determine if the lower price of $2.50 per share of the Shares assigned by the Company was reasonable as compared to the $5.00 price per common share offered to third party investors in a private placement during the same period.

For this appraisal, we used the definition of Fair Value as defined by the Financial Accounting Standards Board as:

Mr. Eugene A. Soltero April 28, 2006 Page 2

The conclusions presented in this letter are based on the analyses and documentation described in the accompanying report. Enclosure A (Assumptions and Limiting Conditions) and Enclosure B (Certification of Appraisers) are integral parts of this letter. In the course of the appraisal, we relied on financial and other information provided to us by management and obtained from public sources that we believe to be reliable. Our conclusions are dependent upon such information being complete and accurate in all material respects. However, we have not verified such information and, accordingly, we do not express an opinion or any other form of assurance thereon.

Based on the accompanying analysis, it is our opinion that as of November 1, 2005, the Fair Value of the subject 200,000 Shares of common stock was:

A narrative valuation report follows this letter which describes the analysis and conclusions presented herein. HSSK appreciates the opportunity to provide this analysis.

Sincerely,

/s/J. M Hill, Jr.

J. Michael Hill, Jr., ASA, CPA, ABV

/s/Ray Sheeler

Ray A. Sheeler, CPA, DABFA, CPCM

The date of value to which the opinions expressed in this report apply is set forth in the letter of transmittal. The appraiser assumes no responsibility for economic or physical factors occurring at some later date that may affect the opinions herein stated.

Information furnished by others, upon which all or portions of the accompanying appraisal is founded, is believed to be reliable, but has not been verified or audited except where expressly stated. No warranty is given as to the accuracy of such information. The appraised value is predicated on the financial structure prevailing as of the date of value.

No opinion is intended to be expressed for legal matters that would require specialized investigation or knowledge beyond that ordinarily employed by business appraisers, although such matters may be discussed in the report.

No responsibility is assumed for any legal description or for matters including legal or title considerations. Title to the business and/or subject asset(s) is assumed to be good and marketable unless otherwise stated.

The business and its underlying assets are appraised free and clear of any or all liens or encumbrances unless otherwise stated.

Responsible ownership and competent management are assumed.

It is assumed there is full compliance with all applicable federal, state and local environmental regulations and laws unless noncompliance is stated, defined and considered in the appraisal report.

It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless a nonconformity has been stated, defined and considered in the appraisal report.

Possession of this report, or a copy thereof, does not carry with it the right of publication. Any use of this valuation other than for the stated purpose is expressly forbidden. Unless written approval is expressly given, this appraisal report cannot be included, or referred to, in any Securities and Exchange Commission filings or other public documents.

Neither HSSK nor the appraiser(s) signing or associated with this report shall, by reason of this appraisal, be required to give further consultation, testimony, or be in attendance in court with reference to the subject business and/or asset(s) unless arrangements have been previously made.

The allocation, if any, in this report of the total valuation between components of that value applies only to the program of utilization stated in the report. The separate values for any component may not be applicable for any other purpose and should not be used in conjunction with any other appraisal.

Neither all nor any part of the contents of this report (especially any conclusions as to value), the identity of the appraiser(s), or the firm with which the appraiser(s) is connected shall be disseminated to the public through advertising, public relations, news, sales, or other media without the prior written consent and approval of the appraiser(s).

Neither HSSK nor its principals have any current or contemplate any future interest in the business or asset(s) appraised.

This analysis is founded on information available at the writing of this report. Should additional information become available, we reserve the right to reassess our opinion.

The maximum liability of HSSK relating to services rendered under this letter (regardless of form of action, whether contract, negligence or otherwise) shall be limited to the charges paid to HSSK for the portion of its services or work products giving rise to liability. In no event shall HSSK be liable for consequential, special, incidental or punitive loss, damage or expense (including, without limitation, lost profits, opportunity costs, etc.) even if it has been advised of their possible existence.

1. The statements of fact contained in this report are true and correct.
2. The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, impartial, and unbiased professional analyses, opinions and conclusions.
3. We have no present or prospective interest in the property that is the subject of this report, and we have no personal interest with respect to the parties involved.
4. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.
5. Our engagement in this assignment was not contingent upon developing or reporting predetermined results.
6. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.
7. Our analyses, opinions and conclusions were developed and this report has been prepared in conformity with The Uniform Standards of Professional Appraisal Practice. Any departure from these standards is solely related to the level of disclosure herein.
8. Other than Pamela B. White, CPA/ABV, no one provided significant business appraisal assistance to the persons signing this certification.

As requested, HSSK has made an appraisal of the Fair Value of 200,000 shares of common stock of Zion granted to Mr. Richard Rinberg on November 1, 2005. This appraisal was requested in order to address a "cheap stock" issue raised by the Securities and Exchange Commission in conjunction with a pending IPO by the Company.

For this appraisal, we have used the definition of Fair Value as defined by the Financial Accounting Standards Board as:

As part of our assignment, we interviewed Mr. Gene Soltero (Chief Executive Officer of Zion).

In the performance of our assignment, we have read and/or analyzed the following information:

Zion is an initial stage oil and gas exploration company with a 5-year history of oil and gas exploration in Israel, including the drilling of one exploratory well. The Company's principal assets are petroleum rights issued by the Ministry of National Infrastructure of the State of Israel, specifically, an exploration license covering approximately 98,100 acres in the northern portion of Israel's central coastal plain. The Company also holds a preliminary permit with priority rights covering approximately 121,100 acres abutting on the territory covered by the original license. To date, the Company has recorded no revenues or operating income. The executive offices of Zion are located at 6510 Abrams Road, Suite 300, in Dallas, Texas. A satellite operating office is located at 15 Bareket Street, North Industrial Park, in Caesarea, Israel.

1

Zion was incorporated in Florida on April 6, 2000, and reincorporated in Delaware on July 9, 2003. Since its origination, the Company has conducted data accumulation, research and analysis related to onshore oil and gas potential in the northern portion of Israel's central coastal plain. Effective January 1, 2003, the Israeli government approved the Company's prospects for drilling and consolidated its existing petroleum rights into a single exploration license covering approximately 95,800 acres. On August 1, 2005, the license was extended to cover approximately 98,100 acres. The license expires April 30, 2007.

On December 29, 2004, Zion signed a drilling contract to reenter and deepen a well abandoned by a previous licensee. Drilling operations commenced on April 10, 2005. Completion operations were commenced on July 20, 2005, then temporarily suspended on November 4, 2005, pending completion of a technical review of all the data collected during the drilling and completion operations. On August 1, 2005, Zion was awarded a preliminary permit with priority rights to conduct preliminary geological and geophysical exploration activities on an area covering approximately 121,000 acres to the north and west of its original license. The permit expires on January 31, 2007, but can be converted into an exploration license on up to 100,000 acres on the completion of the required work program.

On March 20, 2006, Zion issued a Prospectus for an IPO. The Company offered to sell a minimum of 350,000 up to a maximum of 2,000,000 shares of common stock (par value of $0.01 per share) for $7.00 per share. If the IPO is subsequently consummated as planned, the net proceeds will be used for exploratory well completion and drilling, prospect exploration, debt reduction and working capital.

To date, Zion does not yet have any proven reserves or current production of oil or gas.

The directors, executive officers and key employees of Zion are as follows:

Zion is a C-corporation. The articles of incorporation authorize Zion to issue up to 20,000,000 shares of common stock at $0.01 par value per share. The Prospectus shows the shareholders and shares outstanding reflecting the "beneficial ownership" of Zion (as defined in Rule 13d-3 of the Exchange Act) as follows:

The five senior executives of Zion and Mr. DeVore (the "Senior Group") hold proxies to vote the shares of certain other shareholders. Depending on how many shares are issued, the Senior Group will control between 54% and 66% of the outstanding voting rights. The Senior Group, if they all vote together, may have the ability to:

3

Rinberg's 200,000 Shares are included in the 787,626 shares shown in the above table. The subject Shares represent a minority interest in the Company of less than 5% as of the date of appraisal.

Mr. Richard Rinberg ("Rinberg") has been a private investor and manager of his family's funds since 1996. Rinberg was appointed a director of Zion in November, 2004. He was elected President in October, 2005. In connection with his appointment, Rinberg signed a two-year Retention and Management Services Agreement with Zion (the "Agreement") that commenced November 1, 2005. Under the terms of the Agreement, Rinberg, as an independent contractor, makes available to the Company and provides as much of his time as is required to fulfill his duties as President.

The principal element of compensation to Rinberg under the Agreement is a $500,000 fee, payable in the form of 200,000 shares of common stock (the "Shares"), subject to certain pro-rated vesting over the retention period and voting agreement requirements. As of the date of this appraisal, the Agreement has not been finalized.

Our appraisal assumed that all parties, including a prospective buyer of the subject interest in Zion, would comply with all the provisions of the Agreement in effect as of the appraisal date. Certain key provisions are as follows (capitalized terms are defined in the Agreement):

• Rinberg shall be prohibited from selling, transferring, hypothecating or disposing in any way, other than by operation of law, the Shares until the end of the Lock-up Period (Article 4-c).
• Following the end of the Lock-up Period, the Trustee will transfer the Shares to Rinberg upon demand, but in no event before all taxes due, if any, have been paid (Article 4-d).
• The Shares shall be issued in accordance with the provisions of, and subject to, the restrictions of Regulation S promulgated pursuant to the Securities Act of 1933, as amended (Article 4-e). The Shares may not be offered for sale, sold, transferred or otherwise disposed of unless registered or exempt from registration (Article 4-h).
• If the Agreement terminates prior to the Term (for any reason), Rinberg and the Trustee shall sell back to the Company such number of Shares that have not yet been earned by Rinberg (on a pro-rata basis as calculated using the number of days into the 24 month term). The price at which the Shares shall be sold back to the Company shall be $0.01 per Share. (Article 4-f).
• The Shares shall be subject to a "voting agreement" with an irrevocable proxy in favor of the Chairman of the Board of Zion (Article 4-g).

For the appraisal and determination of the Fair Value of certain business interests, there are two major elements of value that may be considered. The first is the assets owned and operated by the business that would be sold to a willing buyer and thus considered essential to the continued operation. The second is the value of the earnings stream, if any, that is available to the purchaser. In most valuations of on-going operating businesses, earnings are given the primary emphasis in estimating overall value. If earnings are not sufficient to provide a reasonable return on the assets of the business, then the value of the underlying assets may become a major focus.

5

In our appraisal of the subject Shares herein, at management's request we have confined our analysis to the market approach, particularly, the review of recent earlier transactions in Company's common stock as compared to the subject Shares initial transaction. While the cost and income approaches are most likely applicable to the assignment, we agree with management that use of the market approach alone results in a highly credible value conclusion for the subject Shares, given (i) the start-up nature of the Company, (ii) the absence of historical revenues or positive earnings, (iii) the speculative nature of the enterprise, and (iv) the quantity and quality of the available data underlying the market approach and otherwise available for other approaches.

The theory of the market approach to valuation is based on the economic principle of substitution: one would not pay more than one would have to pay for any equally desirable alternative. The market approach is highly relevant because it uses observable, factual evidence of actual sales of similar businesses or of a company's own stock to derive and conclude an indication of value for the subject interest.

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This method considers prices at which ownership interests in the subject entity have previously been transferred. If the subject company and its circumstances have not changed significantly since the prior transaction, and the elements of an arms length transaction appear to have been met, this method provides a significantly reliable and meaningful indication of value.

During October 2005 (just prior to the date of appraisal), the Company raised $2,900,000 through the sale of 584,000 shares of common stock in a private placement offering at a price of $5.00 per share. Each share of issued common stock was entitled (i) to receive dividends when and as declared by the board of directors and (ii) to one vote per share on all matters submitted to a vote of shareholders. Voting rights are not cumulative. Directors are elected by a plurality vote. The common shareholders do no have control over the dilution of shares or subscription, redemption, conversion or preemptive rights.

Certain provisions of the certificate of incorporation and bylaws place a number of restrictions on common shareholders in general, to discourage a tender offer, proxy contest or other takeover attempt opposed to by the board of directors:

We determined that the timely private placement of common stock described above provides a reasonable starting indication of value for the subject Shares as of the appraisal date. However, a number of discounts must be applied to the $5.00 per share value of the privately-placed common stock in order to derive an appropriate comparable value of the subject Shares. These discounts are necessary to account for various restrictions imposed upon the subject Shares relative to the privately-placed common stock.

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We will discuss the restrictions and the associated discounts in the report sections that follow.

Besides meeting the conditions for a Fair Value indication, the October 2005 private placement represented sales of minority interests in Zion common stock. The subject Shares also represented a minority interest in the common stock. Therefore it was not necessary to apply a minority interest discount to the price of the subject Shares relative to the price of the privately-placed common shares.

Zion is a closely-held corporation with few shareholders. Its stock is not yet registered under the Securities Act of 1933 or state securities laws. As of the appraisal date, the Company had not yet met the requirements of the SEC for going public. Thus, no established market existed for the trading of shareholder interests in Zion at that time, although the prospect of the Company shortly developing a public market was likely.

The marketability of an investment relates to its liquidity, or how quickly the investment can be converted to cash. Illiquidity entails greater exposure to market volatility and higher risk, which reduces (discounts) the value of an investment. Other considerations being equal, an investment is worth more if readily marketable than not, given that investors greatly prefer liquidity over illiquidity.

Two published series of empirical studies are widely recognized as providing market evidence for the quantification of LOM discounts:

From 1966 through 1998, numerous independent studies involving restricted stock were performed. The studies were conducted over a number of time periods under a wide variety of market conditions, and used a multitude of research methodologies and source data. However, the various studies were fundamentally similar, in that they all measured price discounts at which restricted securities were sold relative to prices of unrestricted but otherwise identical stock in the open market.

Restricted (letter) stock is stock identical to the publicly-traded stock of a company in all respects other than for marketability, given the absence of registration with the SEC or other trading restrictions. The restricted stock studies confirmed that a share of restricted stock in a company is worth less than an otherwise identical share of freely traded stock.

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