Company: ZNOG
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001437749-25-009623
Chunk: 550

Company: ZION OIL & GAS INC
Filing Date: 2025-03-27
Form: 10-K
Item: Item 3
Chunk 550
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. Zion determined that the life of the I-35 drilling rig (the rig Zion purchased), is 10 years. Zion is depreciating the rig on a straight-line basis.
    
   Zion uses the First In First Out (“FIFO”) method of accounting for the inventory spare parts, meaning that the earliest items purchased will be the first item charged to the well in which the inventory of spare parts gets consumed.
    
   It is also noteworthy that various components and systems on the rig will be subject to certifications by the manufacturer to ensure that the rig is maintained at optimal levels. Per standard practice in upstream oil and gas, each certification performed on our drilling rig increases the useful life of the rig by five years. The costs of each certification will be added to the drilling rig account, and our straight-line amortization will be adjusted accordingly.
    
   Zion purchased rig spare parts totaling approximately $178,000 and nil during the years ending  December 31, 2024 and 2023, respectively, in preparation for its MJ-01 re-entry project.
    
   Zion sold some excess scrap drilling pipe and accessories for approximately $35,000 to a local Israeli party during the year 2024. This transaction triggered a reduction in Other Drilling Assets, an accumulated depreciation adjustment and a loss on the disposal.

        F-
       13

        Zion Oil & Gas, Inc.

        Notes to Consolidated Financial Statements

   Note 2 - Summary of Significant Accounting Policies (cont’d)
    
   I-35 Drilling Rig & Associated Equipment 

       I-35    Rig    Other      
   Drilling    Spare    Drilling      
   Rig    Parts    Assets    Total  
   US$    US$    US$    US$  
   thousands    thousands    thousands    thousands  
 December 31, 2022   5,225   619   437   6,281 
                 
 Asset Additions   -   -   -   - 
                 
 Asset Depreciation   (634)  -   (126)  (760)
                 
 Asset Disposals for Self-Consumption   -   (11)  -   (11)
                 
 December 31, 2023   4,591   608   311   5,510