A 3D 8-component thermal compositional simulation study has been performed to evaluate the merits of steam-propane injection and a novel vertical-smart horizontal well system for the Lombardi reservoir in the San Ardo field, California. The novel well system consists of a vertical steam injector and a horizontal producer, whose horizontal section is fully open initially, and after steam breakthrough, only one-third (heel-end) is kept open. A 16x16x20 Cartesian model was used that represented a quarter of a typical 10acre 9-spot inverted steamflood pattern in the field. The prediction cases studied assume prior natural depletion to reservoir pressure of about 415 psia. Main results of the simulation study may be summarized as follows. First, under steam injection, oil recovery is significantly higher with the novel vertical-smart horizontal well system (45.5-58.7% OOIP at 150-300 BPDCWE) compared to the vertical well system (33.6-32.2% OOIP at 150-300 BPDCWE). Second, oil recovery increases with steam injection rate in the vertical-smart horizontal well system but appears to reach a maximum at about 150 BPDCWE in the vertical well system (due to severe bypassing of oil). Third, under steam-propane injection, oil recovery for the vertical-smart horizontal well system increases to 46.1% OOIP at 150 BPDCWE but decreases to 51.6% OOIP at 300 PDCWE due to earlier steam breakthrough that resulted in reduced sweep efficiency. Fourth, for the vertical well system, steam-propane injection results in an increase of oil recovery to 35.4-32.6% OOIP at 150-300 BPDCWE. Fifth, with steam-propane injection, for both well systems, oil production acceleration increases with lower injection rates. Sixth, the second oil production peak in the vertical-smart horizontal well system is accelerated by 24-50% in time for 150-300 BPDCWE compared to that with pure steam injection.