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Grapevine Energy, LLC. California

Grapevine Energy, LLC (‘Grapevine’) is a wholly-owned subsidiary of Horizon. It was formed to acquire leasehold interests in Kern County, California and explore for and develop hydrocarbons thereon. Grapevine’s area of interest contains a significant hydrocarbon discovery (‘Discovery’) made in the fall of 2014 by a company of which the founder of Horizon was formerly the Chief Executive Officer. The Discovery was confirmed by the results of mud logs, wireline well logs, Schlumberger’s modular formation dynamic tester (MDT) and detailed petrophysical analysis of the Sun Grove 2-1 well. Re-processed and newly interpreted 3-D seismic data not only supports the accurate identification of the zones of interest encountered in the Sun Grove 2-1 well, but also delineates the areal extent of the Discovery.

There are compelling nearby production and reserve analogues to the primary Stevens Sand objective, and the Discovery was the product of close to five years of extensive technical effort and the expenditure of approximately $25 million for land, seismic, geological/geophysical and drilling costs. Unfortunately, the well was lost after installing production tubing due to mechanical complications. As the result of financial constraints and pending lease expirations, the company was not in a position to re-drill the Discovery well. On the basis of well-established relationships with two major oil and gas companies in California, which are the largest oil and gas mineral owners in the area, Horizon has been able to reassemble the land position comprising the Discovery. The geological risk is minimal. On a risked basis, with the inclusion of the two lower sands which were logged but not tested with the MDT, the Discovery contains approximately 7.5 million barrels of oil.

There are several other untested prospects within the area under Grapevine’s control that could contain up to an additional 40 million barrels of oil. The finding and development costs for the Discovery should be materially less than $10 per barrel of oil.

Grapevine Energy, LLC. California at a Glance
Location Kern County, California
Size 9,000 acres
Working Interest 50% - Horizon
Geophysics Acquiring 27 sq. miles of 3D Seismic data
Work Completed $25 million by prior operator on land, seismic, geophysical, and drilling
Historical Work Geological studies; 3D Seismic Reprocessing/Inversion;
2016 Activity Acquisition of 3D Seismic; Planned drilling 2017
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