Zion Oil & Gas Up 8% - No, Don’t, Really, It’s A Dog

Zion Oil & Gas (OTCMKTS: ZNOG) has been around for decades now. It puts itself forward as an oil and gas prospector. As far as I'm aware it has found none in all that time despite using substantial quantities of shareholder capital in the hunt. The problem could be that it is drilling in Israel. Not known as a major centre of hydrocarbon deposits.

But that then is due to the basic idea of the company itself. Which is that according to certain views of Biblical prophecy there ought to be oil in Israel. As men of faith they therefore drill for what ought to be there. This may sound less than convincing to those who do not share that same view of Biblical prophecy. Those who don't will also - to date of course - have more money than those who invested on this basis.

Zion Oil & Gas stock price from Google

That's not a grand record for an exploration company to be fair about matters. And the plan really is that Dispensationalist prophecy says that oil should be there. So, they go looking for it because they are dispensationalists. 

Well, that's the polite description of course. John Hempton at Bronte Capital has been rather ruder about them for a decade and a half at least. I've been less than complimentary myself, suggesting that if they drilled through a gas station they might miss the hydrocarbons.

So, the useful advice is simply to steer clear of this stock, Zion. As we can see from the bounce today it's a dangerous thing to short, an 8% pop is painful when you're short. But the idea that there's substantial value in the stock is also, umm, less than I think is likely true.

The point though is really not to highlight this one stock. It's to point out that there are all sorts of reasons that people run companies, others invest in them. We need to know that whoever is doing whatever is actually in line with our own desires and interests. Where there might be a divergence then we shouldn't be investing - not on any grounds other than we have certain desires to gain from our investments so why would we channel money in the direction of someone who isn't even trying to achieve that same goal?