Abstract: Low-grade faults control the distribution of hydrocarbon and the assembling of residual oil in the middle and later stage of development. Horizontal well exploitation is to extract the residual oil and improve the hydrocarbon recovery. Faults should be accurately identified during the design of horizontal well to set a suitable well trace. Based on seismic data, geological information, drilling data and recovery information and using drilling interpretation result, oil/water relationship and hydrocarbon recovery information, the seismic profile interpretation technique, coherent body interpretation technique as well as visualization interpretation technique, we interpreted and verified the low-grade faults of fault block reservoir at L1 oilfield. On the basis of this, we interpreted the inconsistent distribution of oil/water/gas displayed on logging data and the inconsistency between actual output and predicted producibility. The average daily oil production level of the horizontal wells designed according to the interpretation is two to four times than that of conventional deviated wells, greatly increasing the output.