Dr. David Winter reports

HORIZON PETROLEUM CLOSES A FIRST TRANCHE OF CONVERTIBLE DEBENTURE UNIT OFFERING

Horizon Petroleum Ltd., subject to TSX Venture Exchange acceptance, has closed the first tranche of its secured convertible debenture units of the company at a price of $1,000 per unit, for aggregate gross proceeds of $2,465,000. Twenty-five investors subscribed for the financing.

Dr. David Winter, chief executive officer of the company, commented: "We appreciate the interest and support of our shareholders and key advisors at Leede Financial as we prepare to test and develop the natural gas discoveries at Lachowice in southern Poland. We are looking forward to commencing the civil works to prepare the Lachowice-7 well site for the testing and first production and continuing our technical and operations planning work for the Lachowice gas development".

The convertible debentures bear interest from the applicable issuance date at 7 per cent per annum until the date that is 24 months following the closing date (the maturity date) with interest paid semi-annually in arrears in cash or in shares at the company's option. The convertible debenture will be secured and ranking on default in fourth position behind the currently issued debentures due on May 20, 2026 (Series 1 debentures), the convertible debentures due on Dec. 19, 2027, Dec. 29, 2027, and Feb. 27, 2028 (Series 2 debentures), and the convertible debentures due on March 25, 2028 (Series 3 debentures).

Each holder of a secured convertible debenture unit shall have the right, at its option, at any time up to and including the maturity date, to convert any or all of the secured convertible debenture units into equity units on the basis of each $1,000 principal amount for (i) 9,524 common shares of the corporation issued at 10.5 cents per common share, and (ii) 4,762 common share purchase warrants, with each warrant exercisable until 36 months from closing the debentures, into one common share at a price of 15 cents.

In connection with the tranche, the company paid finders' fees of $172,550 cash and 1,643,333 finder warrants with an exercise price of 10 cents per warrant with an expiry date of April 13, 2028.

The company intends to use the proceeds from the offering to complete the civil works at the Lachowice 7 well site, the payment of existing liabilities and for general corporate purposes.

All securities issued under the offering, including securities issuable on exercise thereof, are subject to a hold period expiring four months and one day from the date hereof.

Early warning reporting matters

As a result of his participation in the debenture offering, Trevor Williams of Stavely, Alberta, Canada, a member of the board of directors of the company, indirectly through his holding company, Wilco Investments Ltd., acquired 420 secured convertible debenture units holding the right to convert or be exercised into an aggregate of six million common shares upon conversion and exercise of the secured convertible debenture and the debenture warrants, respectively. Prior to the debenture offering, Mr. Williams, directly or indirectly, held 3,999,080 common shares, being 6.9 per cent of the issued and outstanding common shares of the Horizon prior to the debenture offering. Mr. Williams also holds 850,000 warrants which are exercisable into common shares at a price of 20 cents per common share. Mr. Williams also holds $300,000 of convertible debentures due in December, 2026, and Feb. 27, 2026, and $735,000 of convertible debentures due in March, 2028. The debentures entitle Mr. Williams, directly or indirectly, to acquire a further 15 million common shares assuming full conversion of the debentures and underlying warrants. As a result of the debenture offering, the amount of diluted common shares beneficially held by Mr. Williams, directly and indirectly, is 25,849,080, amounting to 32.3 per cent (assuming the conversion of all debentures and the exercise of all debenture warrants) of the issued and outstanding common shares of Horizon on a partially diluted basis.

Mr. Williams has executed an undertaking in which he agreed not to convert an amount of the convertible debenture or exercise an amount of the debenture warrants if the conversion or exercise, as applicable, would result in Mr. Williams owning more than 19.9 per cent of the issued and outstanding common shares. Mr. Williams participated in the secured convertible debenture offering pursuant to an exemption from the prospectus requirements and participated on equal terms available to all subscribers under the secured convertible debenture offering, purchasing debenture units at a price of $1,000 per debenture unit for a total consideration of $2,465,000 paid to Horizon. Mr. Williams participated in the secured convertible debenture offering in the ordinary course of business and acquired the debenture units for investment purposes. In accordance with applicable securities laws and subject to applicable stock exchange requirements and the undertaking, Mr. Williams may from time to time and at any time directly or otherwise, increase or decrease his ownership, control or direction of common shares and/or other equity, debt, or other securities or instruments of Horizon in the open market, by privately negotiated agreement, or otherwise. A copy of the early warning report in relation to Mr. Williams's participation in the secured convertible debenture offering will be filed under Horizon's profile on SEDAR+.

Multilateral Instrument 61-101 -- related party transactions

A director of the corporation, either directly or through his holding company, subscribed for 420 secured convertible debenture units for a total principal amount of $420,000 with the same terms which constitutes a related party transaction within the meaning of Multilateral Instrument 61-101. The company is relying on the exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(b) and 5.7(1)(a) of MI 61-101, as the fair market value of the participation in the secured convertible debenture unit offering by directors and officers does not exceed 25 per cent of the market capitalization of the company, as determined in accordance with MI 61-101. The material change report to be filed in relation to the closing of the debenture offering will not be filed at least 21 days prior to the completion of the debenture offering as contemplated by MI 61-101. Horizon believes that this shorter period is reasonable and necessary in the circumstances as the completion of the debenture offering occurred shortly before the issuance of such material change report in relation to the debenture offering.

The offering is subject to certain conditions including, but not limited to, the receipt of all necessary approvals, including the approval of the TSX Venture Exchange. The financing was treated as a loan with bonus warrants by the TSX Venture Exchange.

About Horizon Petroleum Ltd.

Calgary-based Horizon is focused on the appraisal and development of conventional oil and natural gas resources to increase energy independence and security in Europe. Horizon holds two concessions in Poland which contain significant undeveloped natural gas discoveries. The company's initial focus is to commence development of the Lachowice gas field in the Bielska-Biala concession. The management and board of Horizon consist of oil and natural gas professionals with significant international experience.

We seek Safe Harbor.