Horizon Petroleum Announces Updated NI51-101 Reserves and Resources Report for Poland

Horizon Petroleum Ltd. is pleased to report the results of a recent independent reserve and resource evaluation on the Lachowice conventional natural gas field in the Bielsko-Biala concession in southern Poland.  The Reserves Report has an effective date as of October 01, 2022 and was prepared in compliance with the standards set out in National Instrument 51-101 of the Canadian Securities Administrators and the Canadian Oil and Gas Evaluation Handbook.

Discussion of Reserves and Resources
Horizon holds the rights to a 100% interest in two conventional oil & natural gas concessions in Poland known as Bielsko-Biala and Cieszyn through two wholly owned Polish subsidiary companies which the Company acquired from San Leon Energy. The full details of the acquisition are described in our Annual Financial Statements and Management Discussion and Analysis.  The Company has also re-engaged with the Polish Ministry of the Environment to complete the Transformation Process as described in the Annual Financial Statements and Management Discussion and Analysis. In summary a  transformation of the concessions to the new Polish concession laws ("Transformation Process") is required by the Polish government as a result of the implementation of amendments to Poland's geological and mining laws. An application for the Transformation Process was submitted to the Polish government in December of 2016 for the Primary Concessions, however, it is not yet complete. The licenses for the Primary Concessions expired in April and August of 2018, however, as the Transformation Process for the Primary Concessions had already commenced they are effectively in suspension pending a decision by the Polish government on the Transformation Process. The timing of completing the Transformation Process has been severely impacted by travel and work restrictions imposed to combat the Covid-19 pandemic, as well as by the Company's lack of financial resources. Completing the Transformation Process will involve negotiations with the Polish Government to finalise: (i) the work programs to be conducted, and (ii) the value of the concession fees and guarantees that will be paid to the Polish government.

APEX Global Engineering Inc. prepared the Reserves Report with an effective date of October 01, 2022.  APEX assigned the Probable Reserves and Contingent and Prospective Resources to the Lachowice field, which at 10,561 acres represents approximately 4% of the total lands to be held under the concessions (see Table 1 below). The reserves and resources assigned are subject to significant risks. Please refer to the Risks section at the end of this press release.

History and Development Plan
The Lachowice field is at an early stage of conventional natural gas development.  Lachowice-1, Lachowice-7 and Stryszawa-2K are the primary wells of interest on the field and, despite being essentially vertical in their design and utilizing sub-optimal drilling and completion methods for naturally fractured formations, tested at rates of up to 5.8 MMcf/d, 8.9 MMcf/d, and 2.5 MMcf/d, respectively.  Each of these wells was drilled and tested, with reservoir depths of 3,000-4,000 meters targeting a naturally fractured carbonate reservoir of Middle Devonian age.  The natural gas is sweet, with up to 91% methane and 7 bbls/MMcf of condensate.

Following receipt of the Reserves Report, Horizon is currently in the process of finalizing its development plan.  In general, it is currently anticipated that the development plan would begin with the re-entry of an existing wellbore.  Provided Horizon successfully closes the Acquisition and is successful with the Transformation Process, it is targeting to re-enter and test a well in the first half  of 2024, with first production to occur into a temporary compressed natural gas unit Q2, 2024, with natural gas sales initially facilities constrained at approximately 1.5 MMcfe/d.  If well capability is higher, incremental production and sales can be realized with the addition of more temporary facilities and trucking.  The wells will produce natural gas under primary drive via the natural fractures and the matrix porosity within the reservoir.  The project is considered pre-development and is expected to cost approximately US$7.5 million to first production.