What happened

Shares of Zion Oil & Gas, Inc. (NASDAQ:ZN) soared last month, rising more than 50% after announcing that it uncovered oil and gas while drilling an exploration well in Israel.

So what

In mid-February, Zion Oil & Gas announced that it encountered oil and gas while drilling its Megiddo-Jezreel #1 well in northern Israel. The company noted that as it was working on the well, it "experienced a continued and significant increase in gas followed by clear evidence of oil" after drilling to a depth of more than 16,500 feet (or about three miles deep).

A drilling rig in Israel.

Image source: Getty Images.

In commenting on the discovery, CEO Victor Carrillo stated that he was "ecstatic to see clear evidence of hydrocarbons (oil and gas) in the deeper portion of our Megiddo-Jezreel #1 well -- a project that we have been working on for years." However, he warned that, "at this time we cannot comment on the commerciality or ability to successfully produce the well." The next step is to conduct tests to see whether this well can commercially produce oil and gas, which the company expects to begin in April.

Now what

While finding oil and gas in an exploration well is a notable achievement, it doesn't yet mean Zion Oil & Gas has discovered a producible field, nor that this endeavor will be a profitable one. That's worth noting since the company doesn't currently produce any oil, nor make money. As such, if this well isn't deemed commercial, the company's stock could plummet. Meanwhile, even if it is, the company will likely need to raise more money to bring it online and keep drilling. Those factors make it a high-risk oil stock that is more like a lottery ticket than an investment.

Because of that, investors might want to consider a company like Noble Energy (NASDAQ:NBL) instead. Not only does it operate two mammoth offshore gas fields in Israel, but it has a very profitable U.S. oil business. Those dual fuels have Noble Energy on track to grow its cash flow at a 35% annual rate through 2020, which increases the likelihood that Noble can create value for investors in the years ahead.