SOURCE: Coastal Energy Company

Coastal Energy Company

August 23, 2010 16:15 ET

Coastal Energy Announces Second Quarter 2010 Financial Results

HOUSTON, TX--(Marketwire - August 23, 2010) - Coastal Energy Company (the "Company" or "Coastal Energy") (TSX-V: CEN) (AIM: CEO), an independent exploration and production company with assets in Thailand, announces the financial results for the quarter ended June 30, 2010. The functional and reporting currency of the Company is the United States dollar.

Second Quarter 2010 Highlights

--  Average total Company production of 9,814 boe/d; including average
    offshore production of 7,914 bbl/d
--  EBITDAX of $29.9 million, or $0.27 per fully diluted share
--  Net income of $8.6 million, or $0.08 per fully diluted share
--  Drilling of the first three development wells at the Bua Ban field

Operational Highlights

During the second quarter Coastal Energy began developing its second proven offshore field in the Gulf of Thailand. The first three wells, Bua Ban A-01, A-02 and A-05, were drilled and logged during June. All three encountered oil in the Lower Oligocene reservoir, and the Bua Ban A-05 well encountered two additional productive pay zones in the Lower Oligocene reservoir. These reservoirs had not been seen in previous wells. An appraisal well has been scheduled for September to determine the extent of these reservoirs.

To date two additional wells, Bua Ban A-03 and A-06, have been drilled and completed in the third quarter and have both encountered oil in the Lower Oligocene reservoir. The Bua Ban A-03 well also encountered oil in the Miocene reservoir. This is the first time productive Miocene sands have been encountered in Block G5/43. All five Bua Ban wells have been completed and tied in to production facilities. Our current offshore production rate is approximately 11,800 bopd and total production is approximately 13,800 boe/d.

Randy Bartley, President and CEO of Coastal Energy, commented:

"As we pass the midway point of 2010, I am pleased to report the great strides the Company has made this year. Production at Songkhla A in the second quarter was 18% higher than the year ago period. Our EBITDAX has doubled from the same period a year ago and net income is over seven times what it was in the second quarter of 2009."

"There is further potential at Bua Ban that we will be evaluating in the coming months which could bring additional upside for the Company. Following several additional development and exploration wells at Bua Ban, we have exploration prospects at Bua Ban North that we will begin drilling in the fourth quarter. As we move forward through the remainder of 2010, we will continue to strive for further success in the development of our offshore assets."

The following financial statements for the Company are abbreviated versions. The Company's complete financial statements for the three and six months ended June 30, 2010 with the notes thereto and the related Management Discussion and Analysis can be found either on Coastal's website at www.CoastalEnergy.com or on SEDAR at www.sedar.com. All amounts are in US$ thousands, except share and per share amounts.

CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS AND DEFICIT

                          Three months ended          Six months ended
                                 June 30,                  June 30,
(US$ 000s)                  2010         2009         2010         2009
                        -----------  -----------  -----------  -----------

Revenues
  Oil and natural gas   $    42,164  $    28,017  $    91,674  $    36,217
  Royalties                  (3,154)      (1,880)      (6,804)      (2,421)
  Loss on derivative             (1)        (836)         (66)      (1,923)
  Interest Income                 1            5            3           16
                        -----------  -----------  -----------  -----------
                             39,010       25,306       84,807       31,889
                        -----------  -----------  -----------  -----------

Expenses
  Production                  8,499        9,532       18,636       12,852
  General and
   administrative             4,095        3,210        7,892        6,403
  Foreign exchange loss
   (gain)                       (11)       1,765          453        1,397
  Interest                      349        1,347          697        2,366
  Debt financing fees           119           26          243          926
  Depletion,
   depreciation and
   accretion                 11,612        7,698       24,906       10,856
  Settlement                      -        2,365            -        2,365
                        -----------  -----------  -----------  -----------
                             24,663       25,943       52,827       37,165
                        -----------  -----------  -----------  -----------

Net income (loss)
 before taxes and
 earnings from
 significantly
 influenced investee
 and non-controlling
 interest                    14,347         (637)      31,980       (5,276)

Income tax                    8,642            -       18,867            -
                        -----------  -----------  -----------  -----------

Net income (loss) from
 before earnings from
 significantly
 influenced investee
 and non-controlling
 interest                     5,705         (637)      13,113       (5,276)

Earnings from
 significantly
 influenced investee          2,927        1,854        5,732        3,264

Net income (loss)
 before non-controlling
 interest                     8,632        1,217       18,845       (2,012)

Non-controlling
 interest                       (55)           -          (50)           -
                        -----------  -----------  -----------  -----------

Net income (loss) and
 comprehensive income
 (loss)                       8,577        1,217       18,795       (2,012)

Deficit, beginning of
 period                      (6,484)     (19,816)     (16,702)     (16,587)
                        -----------  -----------  -----------  -----------
Retained earnings
 (deficit), end of
 period                 $     2,093  $   (18,559) $     2,093  $   (18,599)
                        -----------  -----------  -----------  -----------

  Basic and diluted
   earnings (loss) per
   share                $      0.08  $      0.01  $      0.17  $     (0.02)
                        -----------  -----------  -----------  -----------

Weighted average number
 of common shares
 outstanding, fully
 diluted                112,633,874   97,739,424  112,889,135   94,596,190
                        -----------  -----------  -----------  -----------



CONSOLIDATED BALANCE SHEETS

                                                  June 30,    December 31,
(US$ 000s)                                          2010          2009
                                                ------------- ------------

Assets
Current Assets
  Cash and cash equivalents                     $       4,647 $     21,229
  Restricted cash                                       3,037        3,829
  Accounts receivable                                   6,706        6,111
  Derivative asset                                          -           66
  Inventory                                             8,768        5,310
  Prepaids and other current assets                       299          526
                                                ------------- ------------
                                                       23,457       37,071

Investments in and advances to Apico, LLC              56,803       55,225
Property, plant and equipment, net                    300,203      233,014
Deposits and other assets                                 296          299
                                                ------------- ------------
Total Assets                                    $     380,759 $    325,609
                                                ------------- ------------

Liabilities
Current liabilities
  Accounts payable and accrued liabilities      $      51,554 $     31,325
  Deferred Income                                      17,533       23,060
  Income taxes payable                                     49           38
  Amounts due to shareholder                            3,388        5,164
  Current portion of long-term debt                     8,183       10,266
                                                ------------- ------------
                                                       80,707       69,853

Long-term debt                                         20,388       24,284
Asset retirement obligations                            8,442        2,809
Future income tax liability                            47,242       27,695
                                                ------------- ------------
Total Liabilities                                     156,779      124,641
                                                ------------- ------------

Commitments and contingencies

Non-controlling interests                               6,418        5,617

Shareholders' equity
Share capital                                         200,619      198,121
Contributed surplus                                    14,771       13,779
Warrants                                                   79          153
Retained earnings (deficit)                             2,093      (16,702)
                                                ------------- ------------
Shareholders' equity                                  217,562      195,351
                                                ------------- ------------
Total liabilities, non-controlling interest and
 shareholder's equity                           $     380,759 $    325,609
                                                ------------- ------------



CONSOLIDATED STATEMENTS OF CASH FLOWS


                                    Three months ended   Six months ended
                                         June 30,            June 30,
(US$ 000s)                            2010      2009      2010      2009
                                    --------  --------  --------  --------

Operating Activities
  Net income (loss) for the period  $  8,577  $  1,217  $ 18,795  $ (2,012)
  Earnings distributions from
   significantly influenced
   investee                            3,613     1,083     4,154     1,806
  Items not involving cash
    Depletion, depreciation and
     accretion                        11,612     7,698    24,906    10,856
    Impairment                             -     1,765         -     1,765
    Future income taxes                9,588         -    18,849         -
    Income applicable to
     non-controlling interest             55         -        50         -
    Unrealized foreign exchange loss     167     1,295       842       909
    Stock based compensation           1,892     1,570     3,151     2,146
    Issuance of warrants with notes
     payable                               -         -         -       294
    Share of earnings of
     significantly influenced
     investee, net of taxes           (2,927)   (1,854)   (5,732)   (3,264)
    Unrealized loss on derivative
     instrument                            1       836        66     2,362
  Change in non-cash working
   capital                            19,780      (909)   12,742     3,870
                                    --------  --------  --------  --------
  Cash provided by operating
   activities of continuing
   operations                         52,358    12,701    77,823    18,732
                                    --------  --------  --------  --------

Investing Activities
  Investment in and advances to
   Apico LLC                               -    (4,516)        -    (4,516)
  Decrease in restricted cash            415      (436)      792       670
  Purchase of property, plant and
   equipment                         (53,532)  (17,035)  (89,864)  (33,348)
  Contributions from non-controlling
   interest partner                        -         -       750         -
  Other                                    -      (694)       (6)     (697)
                                    --------  --------  --------  --------
Cash used in investing activities    (53,117)  (22,681)  (88,328)  (37,891)
                                    --------  --------  --------  --------

Financing Activities
  Issuance of shares for cash             46    15,418     1,886    15,418
  Borrowings under long-term debt          -     1,620         -     1,620
  Repayments of long-term debt        (1,000)     (895)   (5,979)   (7,836)
  Borrowings under amounts due to
   shareholder                             -         -         -     1,000
  Repayments under amounts due to
   shareholder                          (253)   (1,121)   (2,003)   (1,121)
  Proceeds from issuance of notes
   payable                                 -         -         -    15,000
  Repayments of notes payable              -    (3,072)        -    (4,072)
                                    --------  --------  --------  --------
Cash (used) provided by financing
 activities                           (1,207)   11,950    (6,096)   20,009
                                    --------  --------  --------  --------

Net effect of foreign exchange on
 cash held in foreign currencies        (116)       63        19        15
                                    --------  --------  --------  --------

Change in cash and cash equivalents   (2,082)    2,033   (16,582)      865
Cash and cash equivalents,
 beginning of period                   6,729     5,266    21,229     6,434
                                    --------  --------  --------  --------
Cash and cash equivalents, end of
 period                                4,647     7,299     4,647     7,299
                                    --------  --------  --------  --------

Cash and cash equivalents
 consists of:
  Cash                                 4,647     3,823     4,647     3,823
  Short-term money market
   instruments                             -     3,476         -     3,476
                                    --------  --------  --------  --------
                                       4,647     7,299     4,647     7,299
                                    --------  --------  --------  --------

Randy Bartley, President and Chief Executive Officer of the Company and a member of the Society of Petroleum Engineering and Jerry Moon, Vice President, Technical & Business Development, a member of the American Association of Petroleum Geologists, a Licensed Professional Geoscientist and a Certified Petroleum Geologist in the state of Texas, have reviewed the contents of this announcement.

Additional information, including the Company's complete competent person's report may be found on the Company's website at www.CoastalEnergy.com or may be found in documents filed on SEDAR at www.sedar.com.

This statement contains 'forward-looking statements' as defined by the applicable securities legislation. Statements relating to current and future drilling results, existence and recoverability of potential hydrocarbon reserves, production amounts or revenues, forward capital expenditures, operation costs, oil and gas price forecasts and similar matters are based on current data and information and should be viewed as forward-looking statements. Such statements are not guarantees of future results and are subject to risks and uncertainties beyond Coastal Energy's control. Actual results may differ substantially from the forward-looking statements.

These securities have not been registered under United States Securities Act of 1933 (the "US Securities Act") or the securities laws of any state and may not be offered or sold in the United States or to US persons (as defined in Regulation S under the US Securities Act) unless an exemption from registration is available.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

This news release is not for dissemination in the United States or through United States newswire services

Contact Information

  • Enquiries:
    Coastal Energy Company

    Randy L. Bartley
    Chief Executive Officer
    +1 713 877 6705

    William C. Phelps
    Chief Financial Officer
    +1 713 877 6727

    Email: Email Contact

    Strand Hanson Limited (Nominated Adviser)
    +44 (0) 20 7409 3494
    Rory Murphy
    Paul Cocker

    Stifel Nicolaus Weisel (Broker)
    +44 (0) 20 3205 3615
    Paul Colucci

    Macquarie Capital (Europe) Limited (Broker)
    +44 (0) 20 3037 2000
    Ben Colegrave
    Paul Connolly

    Buchanan Communications
    Tim Thompson
    +44 (0) 20 7466 5000
    Catherine Breen
    Katharine Sutton