Horizon Petroleum's Lachowice Gas Project: Fueling Poland's Energy Independence and Investor Returns

Poland's push for energy self-sufficiency has reached a critical juncture, and Horizon Petroleum Ltd. (HPL) stands at the forefront of this transformation with its Lachowice Gas Project. As Europe grapples with geopolitical risks and the transition away from Russian gas, HPL's progress toward first production by early 2026 positions it as a compelling investment opportunity. Let's dissect how operational execution, regulatory clarity, and strategic monetization pathways are aligning to unlock asymmetric upside for shareholders.

Operational Milestones: A 2026 Cash Flow Pivot

The Lachowice project is advancing rapidly, with Horizon targeting first production by early 2026—a critical inflection point for the company's financial trajectory. Key milestones include:
- Workover Operations: The L7 well workover begins in September 2025, including re-perforation and acid stimulation of a zone that previously flowed at 8.9 mmscf/d. Successful testing here could validate the field's productivity, a prerequisite for scaling up.
- Infrastructure Advancements: Equipment procurement for the wellhead and completion is underway, with materials arriving by late summer. The relocation of a power line in June 2025 enables wellsite construction to begin in July.
- Early Production Facility (EPF) Progress: Horizon has secured a 2MW grid connection for initial gas-to-power (G2P) sales, with plans to expand to 4MW. The gas processing facility's design is finalized, and equipment sourcing is progressing.

The project's tight timeline—workover in Q4 2025, production testing in early 2026, and EPF installation by mid-2026—reflects a disciplined execution plan. A delay in any step could disrupt cash flow, but Horizon's proactive procurement and regulatory alignment suggest low slippage risk.

Regulatory Approvals and Community Buy-In: A Smooth Path Forward

Regulatory and social risks often derail resource projects, but Horizon has mitigated these through meticulous planning:
- Environmental Permits: The EIA for the L7 workover is approved, and the company is finalizing the EIA for the full production facility. Poland's Ministry of Climate and Environment has prioritized energy projects to meet national security goals, accelerating approvals.
- Land Access and Local Support: All landowner agreements near the L7 site are finalized, and local authorities have endorsed the project's economic and energy security benefits. This alignment reduces the risk of protests or delays.

Poland's push to reduce Russian gas imports (which still account for ~40% of supply) creates a tailwind for Horizon. The government's rezoning of land for industrial use and approval of the 100 km² 3D seismic survey further underscore support for domestic production.

Gas Monetization: G2P or LNG—Which Path Maximizes Value?

Horizon is evaluating monetization options to commercialize Lachowice's output, with three pathways in play:
1. Gas-to-Power (G2P): Selling gas directly to power plants aligns with Poland's coal-to-gas transition. The 2MW grid tie-in can generate immediate revenue, while the 4MW expansion targets future demand.
2. Compressed Natural Gas (CNG): Local distribution via CNG stations could provide a steady, low-risk revenue stream.
3. Liquefied Natural Gas (LNG): Exporting LNG via Poland's emerging infrastructure could unlock higher margins, though this depends on securing export terminals.

The company's decision to delay a final monetization choice until production begins is prudent. Awaiting clarity on gas prices and demand dynamics (e.g., winter heating needs) reduces execution risk.

Strategic Reserves and Financial Potential: A High-Value Play

The Lachowice field's reserves and contingent resources are staggering:
- 2P Reserves: 34 BCF (NPV10: $84.5M)
- 2C Contingent Resources: 163 BCF (NPV10: $431M)

These figures highlight the project's scale, but Horizon's focus on low-risk, high-return development—such as the shorter-distance pipeline tie-in—minimizes costs and accelerates approvals. The full-field development, supported by the 3D seismic survey, could unlock additional resources, further boosting NPV.

Risks to Consider

• Operational Execution: Equipment delays or well underperformance could push first production beyond 2026.
• Market Volatility: Lower gas prices or geopolitical shifts (e.g., EU LNG imports) could reduce project economics.
• Regulatory Hurdles: While approvals are progressing, Poland's permitting process remains complex.

Investment Thesis: Buy Before Production, Bet on Asymmetric Upside

Horizon Petroleum's Lachowice project is a classic “binary” investment: success delivers outsized returns, while failure would be catastrophic. However, the evidence leans heavily toward the former.

• Catalyst-Driven Valuation: The workover results (Q4 2025) and first production (early 2026) will likely trigger a re-rating. If the L7 well meets or exceeds its 8.9 mmscf/d test rate, the stock could surge as investors price in the full 163 BCF resource potential.
• European Energy Security Play: Poland's reliance on Russian gas creates a strategic imperative to back domestic projects. Government support for Horizon's land rezoning and pipeline tie-ins signals priority status.
• Undervalued at Current Metrics: With a market cap of ~$X (insert placeholder value), HPL trades at a significant discount to its NPV10 reserves. A successful ramp-up could double or triple the stock.

Conclusion: A High-Potential, Low-Cost Gas Story

Horizon Petroleum's Lachowice project is more than a gas field—it's a cornerstone of Poland's energy transition. With permits secured, infrastructure on track, and a clear path to monetization, the company is primed to deliver first production and cash flow in 2026. For investors seeking exposure to European gas production at an inflection point, HPL offers asymmetric upside. The risks are real, but the rewards for success—driven by geopolitical tailwinds and a robust reserve base—make this a compelling bet for energy portfolios.

Investment Recommendation: Accumulate HPL ahead of Q4 2025 workover results. A breakout above $X/share (current resistance level) on positive well data could signal a sustained rally. Hold for a 12–18 month horizon, targeting a 2x return if production exceeds expectations.