Abstract: To control gas channeling and water coning, and to enhance development effect in oil reservoir, it is necessary to determine vertical positions of horizontal well accurately in gas cap and bottom water reservoirs. Based on the analysis of production characteristics of reservoirs with different bottom water and gas caps, a mathematical model has been derived for determining the vertical positions of horizontal wells that related to gas cap index, water volumes and reservoir pressures by using gas state equation and material balance equation, so as to establish the relationship among gas cap energy, bottom water energy and vertical positions of horizontal well in oil rim. The mathematical model can determine the reasonable vertical position of horizontal well in different gas cap and the bottom water reservoir to facilitate drilling operations. Numerical simulation and field application results showed that the technique had no restriction and requirement to the geometry of reservoir in determining vertical positions of horizontal wells in the oil rim in accordance with the gas cap index and water volumes, which possess a good adaptability for field applications.