Abstract Horizontal wells provide extended contact with the reservoir, and have unique advantages over vertical wells in many applications. As nominally horizontal wells get longer and follow more complicated trajectories, wellbore hydrodynamics becomes an important issue on well performance. In this paper, we will discuss a problem in horizontal wells - the elevation change in well trajectory and its effect on well performance. In general, a horizontal wellbore is never perfectly horizontal. The inclination angle could be a result of drilling control, or sometimes could be designed on purpose for an extremely anisotropic formation. When vertical permeability is much smaller than horizontal permeability, an undulating wellbore may be favorable to overcome the low vertical permeability. Undulation in wellbore trajectory will change the inflow distribution along the wellbore, and therefore change the wellbore performance. When two-phase flow is involved, especially gas-liquid flow, the pressure distribution in the wellbore may cause flow problems, such as trapping gas because of accumulated liquid at low spots. We use a simple analytical model to examine the flow conditions for inclined or undulated horizontal wells. The reservoir inflow is interactively coupled with the wellbore flow, and the pressure and flow rate distribution are predicted by the model. The model then is used to analyze the development plan for the Cosmopolitan field in Alaska. The field has stress-dependent permeability, and the vertical permeability is much lower than the horizontal permeability. The results of the model explain the effect of wellbore trajectory on well performance of horizontal wells, and justify the benefits of undulating wellbores in horizontal well development in this low vertical permeability reservoir. The study showed that undulating wells in the Cosmopolitan field can help to improve well productivity.