UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

MARK ONE

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period ended June 30, 2011; or

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from

________ to ________

COMMISSION FILE NUMBER: 001-33228

ZION OIL & GAS, INC.

(Exact name of registrant as specified in its charter)

Delaware	20-0065053
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

6510 Abrams Rd., Suite 300 Dallas, Texas	75231
(Address of principal executive offices)	Zip Code

(214) 221-4610

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer x
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of August 1, 2011, Zion Oil & Gas, Inc. had outstanding 30,372,044 shares of common stock, par value $0.01 per share.

INDEX PAGE

PART 1 – FINANCIAL INFORMATION

	Page
Item 1 - Financial Statements – Unaudited	1
Balance Sheets  - June 30, 2011 and December 31, 2010	1
Statements of Operations for the three and six months ended June 30, 2011 and 2010 and the period from April 6, 2000 (inception) to  June  30, 2011	2
Statements of Changes in Stockholders' Equity for the six months ended  June  30, 2011 and the period from April 6, 2000 (inception) to  June  30, 2011	3
Statements of Cash Flows for the six months ended  June  30, 2011 and 2010 and the period from April 6, 2000 (inception) to  June  30, 2011	14
Notes to Unaudited Interim Financial Statements	16
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3 – Quantitative and Qualitative Disclosures About Market Risk	40
Item 4 - Controls and Procedures	40
PART II — OTHER INFORMATION
Item 1 – Legal Proceedings	41
Item A – Risk Factors	41
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3 - Defaults upon Senior Securities	41
Item 4 – (Removed and Reserved)	41
Item 5 - Other Information	41
Item 6 – Exhibits	41
SIGNATURES	42

Zion Oil & Gas, Inc.

(A Development Stage Company)

Balance Sheets as of

	June 30 2011			December 31 2010
	US$ thousands			US$ thousands
Current assets
Cash and cash equivalents		7,090			21,243
Short term bank deposits		256			250
Prepaid expenses and other		668			876
Deferred offering costs		295			-
Refundable value-added tax		2,686			801
Total current assets		10,995			23,170
Unproved oil and gas properties, full cost method (see Note 2A)		42,134			25,882
Property and equipment at cost
Net of accumulated depreciation of $134,000 and $116,000,		215			159
Other assets
Assets held for severance benefits		128			92
Total assets		53,472			49,303
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable		251			388
Asset retirement obligation		50			50
Accrued liabilities		7,473			2,136
Deferred officers compensation		-			21
Total current liabilities		7,774			2,595
Provision for severance pay		431			339
Total liabilities		8,205			2,934
Commitments and contingencies (see Note 5)
Stockholders’ equity
Common stock, par value $.01; Authorized: June 30, 2011 - 100,000,000; December 31, 2010 – 50,000,000 Issued and outstanding:
June 30, 2011 – 25,436,063 and 24,867,218 shares at December 31, 2010		254			248
Additional paid-in capital		105,831			102,608
Deficit accumulated in development stage		(60,818	)		(56,487	)
Total stockholders’ equity		45,267			46,369
Total liabilities and stockholders' equity		53,472			49,303

The accompanying notes are an integral part of the interim financial statements.

1

Zion Oil & Gas, Inc.

(A Development Stage Company)

Statements of Operations

													Period from
													April 6, 2000
	For the three month period						For the six month period						(inception) to
	ended June 30						ended June 30						June 30
	2011			2010			2011			2010			2011
	US$ thousands			US$ thousands			US$ thousands			US$ thousands			US$ thousands
Revenues		-			-			-			-			-
General and administrative expenses
Legal and professional		367			143			580			495			7,430
Salaries		563			753			2,065			1,439			12,526
Other		1,018			526			1,759			845			9,123
Impairment of unproved oil and gas properties		-			22,022			-			22,022			31,516
Loss from operations		(1,948	)		(23,444	)		(4,404	)		(24,801	)		(60,595	)
Other expense, net
Termination of initial public offering		-			-			-			-			(527	)
Other income, net		-			-			-			-			80
Interest income (expenses), net		38			(82	)		73			(85	)		224
Loss before income taxes		(1,910	)		(23,526	)		(4,331	)		(24,886	)		(60,818	)
Income taxes		-			-			-			-			-
Net loss		(1,910	)		(23,526	)		(4,331	)		(24,886	)		(60,818	)
Net loss per share of common stock -  basic and diluted (in US$)
		(0.07	)		(1.13	)		(0.17	)		(1.20	)		(5.26	)
Weighted-average shares outstanding –  basic and diluted (in thousands)
		26,068	*		20,823	*		25,962	*		20,813	*		11,559	*

* Adjusted to reflect bonus element in rights offering, see note 2B.

The accompanying notes are an integral part of the interim financial statements.

2

Zion Oil & Gas, Inc.

(A Development Stage Company)

Statement of Changes in Stockholders' Equity

	Preferred Stock				Common Stock				Additional paid-in			Deficit accumulated in development
	Shares		Amount		Shares		Amount		capital			stage			Total
	Thousands		US$ thousands		Thousands		US$ thousands		US$ thousands			US$ thousands			US$ thousands
Balances April 6, 2000		-		-		-		-		-			-			-
Issued for cash ($0.001 per share)		-		-		2,400		* -		2			-			2
Issuance of shares and warrants in a private offering  ($1 per share)		-		-		100		* -		100			-			100
Costs associated with the issuance of shares		-		-		-		-		(24	)		-			(24	)
Waived interest on conversion of debt		-		-		-		-		* -			-			* -
Value of warrants granted to employees		-		-		-		-		2			-			2
Net loss		-		-		-		-		-			(5	)		(5	)
Balances as of December 31, 2000		-		-		2,500		* -		80			(5	)		75
Issuance of shares and warrants in a private offering in January 2001 ($1 per share)		-		-		135		* -		135			-			135
Issuance of shares and warrants in a private offering which closed in September 2001 ($1 per share)		-		-		125		* -		125			-			125
Payment of accounts payable through issuance of shares and warrants		-		-		40		* -		40			-			40
Payment of note payable through issuance of shares and warrants		-		-		25		* -		25			-			25
Issuance of shares and warrants in a private offering which closed in November 2001 ($1 per share)		-		-		175		* -		175			-			175
Costs associated with the issuance of shares		-		-		-		-		(85	)		-			(85	)
Waived interest on conversion of debt		-		-		-		-		1			-			1
Value of warrants granted to employees		-		-		-		-		37			-			37
Value of warrants granted to directors and consultants		-		-		-		-		3			-			3
Net loss		-		-		-		-		-			(207	)		(207	)
Balances as of December 31, 2001		-		-		3,000		* -		536			(212	)		324

*  Represents an amount less than US$ 1,000

The accompanying notes are an integral part of the interim financial statements.

3

Zion Oil & Gas, Inc.

(A Development Stage Company)

Statement of Changes in Stockholders' Equity (cont’d)

	Preferred Stock				Common Stock				Additional paid-in			Deficit accumulated in development
	Shares		Amount		Shares		Amount		capital			stage			Total
	Thousands		US$ thousands		Thousands		US$ thousands		US$ thousands			US$ thousands			US$ thousands
Change in par value of common shares from $ 0.0001 per share to $0.01 per share		-		-		-		30		(30	)		-			-
Issuance of shares and warrants in a private offering which closed in January 2002 ($1 per share)		-		-		20		* -		20			-			20
Issuance of shares and warrants in a private offering which closed in November 2002 ($10 per share)		25		* -		22		* -		254			-			254
Payment of accounts payable through issuance of preferred shares and warrants		13		* -		-		-		127			-			127
Payment of accounts payable through issuance of common shares and warrants		-		-		111		1		131			-			132
Payment of note payable through issuance of shares and warrants		5		* -		-		-		50			-			50
Payment of accounts payable to employee through issuance of shares upon exercise of warrants		-		-		400		4		76			-			80
Costs associated with the issuance of shares		-		-		-		-		(160	)		-			(160	)
Waived interest on conversion of debt		-		-		-		-		3			-			3
Deferred financing costs on debt conversions / modifications		-		-		-		-		21			-			21
Value of warrants granted to employees		-		-		-		-		1			-			1
Value of warrants granted to directors and consultants		-		-		-		-		13			-			13
Net loss		-		-		-		-		-			(403	)		(403	)
Balances as of December 31, 2002		43		* -		3,553		35		1,042			(615	)		462

*  Represents an amount less than US$ 1,000

The accompanying notes are an integral part of the interim financial statements.

4

Zion Oil & Gas, Inc.

(A Development Stage Company)

Statement of Changes in Stockholders' Equity (cont’d)

	Preferred Stock					Common Stock				Additional paid-in			Deficit accumulated in development
	Shares			Amount		Shares		Amount		capital			stage			Total
	Thousands			US$ thousands		Thousands		US$ thousands		US$ thousands			US$ thousands			US$ thousands
Issuance of shares in connection with executive employment		-			-		50		1		49			-			50
Issuance of share on warrants exercise		-			-		165		2		31			-			33
Issuance of dividend shares to record holders as of December 31,2002		4			* -		-		-		* -			-			-
Issuance of shares and warrants in a private offering which closed in February 2003 ($10 per share):
for cash consideration		10			* -		-		-		105			-			105
for reduction of accounts payable		5			* -		-		-		45			-			45
Issuance of shares and warrants as compensation for extension of $100,000 line of credit		1			* -		-		-		10			-			10
Payment of account payable through issuance of shares and warrants		* -			* -		-		-		1			-			1
Conversion of preferred shares to common shares in reincorporation merger		(63	)		* -		763		7		(7	)		-			-
Issuance of shares in a private offering which closed in July 2003 ($3 per share):
for cash consideration		-			-		33		* -		99			-			99
for reduction of accounts payable		-			-		3		* -		9			-			9
Issuance of shares upon exercise of warrants:
for cash consideration		-			-		25		* -		25			-			25
for reduction of accounts payable		-			-		124		1		142			-			143
Issuance of shares upon exercise of warrants for cash consideration		-			-		63		1		82			-			83
Payment of account payable through issuance of shares		-			-		80		1		139			-			140
Costs associated with the issuance of shares		-			-		-		-		(58	)		-			(58	)
Value of warrants granted to employees		-			-		-		-		47			-			47
Deferred financing costs on debt conversions / modifications		-			-		-		-		(10	)		-			(10	)
Net loss		-			-		-		-		-			(873	)		(873	)
Balances as of December 31, 2003		-			-		4,859		48		1,751			(1,488	)		311

·   Represents an amount less than US$ 1,000

The accompanying notes are an integral part of the interim financial statements.

5

Zion Oil & Gas, Inc.

(A Development Stage Company)

Statement of Changes in Stockholders' Equity (cont’d)

								Deficit
					Additional			accumulated
	Common Stock				paid-in			in development
	Shares		Amounts		capital			stage			Total
	Thousands		US$ thousands		US$ thousands			US$ thousands			US$ thousands
Issuance of shares on warrants exercise		123		1		183			-			184
Issuance of shares and warrants in a private offering		251		3		1,002			-			1,005
Payment of officer salaries through issuance of shares and warrants		46		1		184			-			185
Payment of accounts payable to officers and consultants upon exercise of warrants		80		1		99			-			100
Payment of director honorariums through issuance of shares and warrants		11		* -		45			-			45
Payment of account payable through issuance of shares and warrants		13		* -		50			-			50
Payment of bridge loan through issuance of shares and warrants		125		1		499			-			500
Payment of bridge loan interest and commitment fee through issuance of shares and warrants		8		* -		30			-			30
Payment of bridge loan finders fee through issuance of shares and warrants		2		* -		7			-			7
Payment of service bonus through issuance of shares and warrants		20		* -		20			-			20
Costs associated with the issuance of shares		-		-		(59	)		-			(59	)
Value of warrants granted to employees		-		-		41			-			41
Deferred financing costs on debt conversions / modifications		-		-		30			-			30
Net loss		-		-		-			(1,737	)		(1,737	)
Balances as of December 31, 2004		5,538		55		3,882			(3,225	)		712

*  Represents an amount less than US$ 1,000.

The accompanying notes are an integral part of the interim financial statements.

6

 Zion Oil & Gas, Inc.

(A Development Stage Company)

Statement of Changes in Stockholders' Equity (cont’d)

								Deficit
					Additional			accumulated
	Common Stock				paid-in			in development
	Shares		Amounts		capital			stage			Total
	Thousands		US$ thousands		US$ thousands			US$ thousands			US$ thousands
Issuance of shares on warrants exercised:
For cash		493		5		872			-			877
For payment of deferred officer salaries		17		* -		21			-			21
For exchange of shares of common stock		120		1		(1	)		-			-
Issuance of shares and warrants in a private offering that closed in March 2005:
For cash		519		5		2,070			-			2,075
For payment of deferred officer salaries		10		* -		40			-			40
For payment of accounts payable		6		* -		25			-			25
Issuance of shares and warrants in a private offering that closed in June 2005:
For cash		259		3		1,292			-			1,295
For payment of directors honoraria		14		* -		70			-			70
For payment of accounts payable		3		* -		15			-			15
Issuance of shares in a private offering that closed in October 2005:
For cash		584		6		2,914			-			2,920
For payment of deferred officer salaries		40		* -		200			-			200
For payment of accounts payable		22		* -		110			-			110
Issuance of shares in a private offering that closed in December 2005		80		1		439			-			440
Shares to be issued for services provided by director		-		-		42			-			42
Value of warrants and options granted to employees		-		-		216			-			216
Value of warrants granted to directors and consultants		-		-		16			-			16
Deferred financing costs on debt conversions /modifications		-		-		44			-			44
Costs associated with the issuance of shares		-		-		(275	)		-			(275	)
Net loss		-		-		-			(1,605	)		(1,605	)
Balances as of December 31, 2005		7,705		76		11,992			(4,830	)		7,238

*  Represents an amount less than US$ 1,000.

The accompanying notes are an integral part of the interim financial statements.

7

Zion Oil & Gas, Inc.

(A Development Stage Company)

Statement of Changes in Stockholders' Equity (cont’d)

								Deficit
					Additional			accumulated
	Common Stock				paid-in			in development
	Shares		Amounts		capital			stage			Total
	Thousands		US$ thousands		US$ thousands			US$ thousands			US$ thousands
Issuance of shares on warrants exercised:
For cash		253		3		1,151			-			1,154
For debt		60		1		276			-			277
Issuance of shares and warrants in private offering closings in first quarter 2006:
For cash		66		1		362			-			363
For payment of accounts
Payable		3		* -		14			-			14
Shares issued for services provided by officer		200		2		248			-			250
Issuance of shares and warrants in a private offering that closed in September 2006 for cash		23		* -		126			-			126
Value of options granted to employees		-		-		162			-			162
Value of warrants granted to underwriter		-		-		20			-			20
Value of shares gifted to directors, employees and service providers		-		-		147			-			147
Costs associated with the issuance of shares		-		-		(681	)		-			(681	)
Funds received from public offering for subscription shares:
For cash		410		4		2,867			-			2,871
For debt		27		* -		188			-			188
Net loss		-		-		-			(2,510	)		(2,510	)
Balances as of December 31, 2006		8,747		87		16,872			(7,340	)