) -- Shares of

Zion Oil & Gas

(ZN) - Get Report

fell late Friday after the company disclosed disappointing drilling results in a regulatory filing.

The Dallas-based oil and gas exploration company said in a Form 8-K filing with the

Securities and Exchange Commission

after the close that the results of logging tests performed on its Ma'anit-Joseph #3 well in Israel were "not what we had hoped for."

As a result, Zion Oil said it believes there's "little chance" the well contains hydrocarbons "in commercial quantities," although the company did say it does see evidence of natural gas.

The stock was last quoted at $5.01, down 15%, on volume of nearly 50,000, according to

. Based on a regular session close at $5.90, the shares were up 24% year-to-date, although they'd pulled back since hitting a 52-week high of $7.87 on June 6.

Zion Oil isn't giving up on the well, however, as it has already spent roughly $29 million on "drilling, logging and other related outlays," according to the filing. It's going to conduct further testing procedures expected to cost up to another $2.5 million.

The company argued in its filing that: "If we do not test the well, then we will never know with any degree of certainty the production capacity, if any, and possibly, at a later date, some other exploratory company may re-enter the well that we drilled and prove it to be commercial."

It continued: "By testing the well, we hope to gain extra insight into exactly what stratigraphic interval(s) the gas is coming from and thus be able to establish with a high degree of certainty this well's hydrocarbon production capacity, if any."

Zion Oil was recently added to the Russell 3000, Russell 2000, Russell Microcap and Russell Global indexes upon their reconstitution on June 24.


Written by Michael Baron in New York.

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Michael Baron


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