SOURCE: Coastal Energy Company

Coastal Energy Company

December 08, 2010 07:00 ET

Coastal Energy Announces Drilling and Operations Update

HOUSTON, TX--(Marketwire - December 8, 2010) - Coastal Energy Company (the "Company" or "Coastal") (TSX-V: CEN) (AIM: CEO) announces an update of its operations in the Gulf of Thailand.

A new field discovery was made at the Songkhla area with the third of three planned wells. The "Songkhla North" field was discovered by the A-11 well, which was drilled to a total depth of 7,974 feet TVD. The well encountered 44 feet of net pay in the Lower Oligocene reservoir with 18% porosity and 69 feet of net pay in the Eocene reservoir with 21% average porosity. Pressure data indicate that the A-11 well was drilled into a separate fault block, north of Songkhla East and that a possible oil-water contact in this fault block exists at 7,500 feet TVD. 

As previously announced, the Songkhla A-09 well was drilled to 8,109 feet true vertical depth and encountered 140 feet of net pay in the Lower Oligocene reservoir with average porosity of 15% and pressures approximating the original reservoir pressure at Songkhla Main. The well also encountered 75 feet of net pay in the underlying Eocene reservoir. This well was tested and flowed at approximately 2,000 bopd at two-thirds pump capacity; better than original Company guidance of 1,000 - 2,000 bopd. 

The Songkhla A-12 well was drilled into the same fault block as the A-09 well. The main Lower Oligocene target zone and the Eocene zone which was tested were water bearing at this location; however, pressure data indicate that the Lower Oligocene reservoir in the A-09 and A-12 wells is a new field discovery ("Songkhla East"). The A-12 well establishes the oil-water water contact and indicates a closure of approximately 287 acres and approximately 20 million barrels of oil-in-place at Songkhla East. The Company plans to sidetrack the A-12 well and target the Oligocene in a better structural position.

Production at Songkhla is currently being shut-in in preparation for the upgrade of processing equipment.

The frac boat is en route to the location at Bua Ban and is soon expected to commence fracture stimulation of the Eocene reservoir in the Bua Ban A-04 well, which encountered over 400 feet of oil bearing sand with average porosity of 14%.

Randy Bartley, Chief Executive Officer of Coastal Energy, commented:

"Drilling results at Songkhla have been successful thus far. We have now identified two new fields in addition to the Songkhla Main field. Production from these fields can be tied into existing facilities at Songkhla once the upgrade of the processing facilities is complete. 

"The A-11 well will require further appraisal drilling to assess the size of the reservoir; however, if the initial pressure data are confirmed, the mapped closure may be approximately 1,700 acres and the oil in place estimate would be approximately 54 million barrels.

"Once drilling is completed at Songkhla, we will move to our high impact exploration targets at Bua Ban North."

Huddleston & Co. assigned 5.6 million barrels of Proved + Probable + Possible reserves to the Songkhla Eocene reservoir in their reserve report dated December 31, 2009. The above stated net pay and porosity figures, which are 50% and 33% higher, respectively, than those used by Huddleston in their December 2009 evaluation, will be used in the 2010 reserves evaluation. 

An updated Songkhla Lower Oligocene structure map is available in the 'Presentation' section of the Company's website.

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
    +1 (713) 877-6793
    Email: Email Contact

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

    Stifel Nicolas 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
    +44 (0) 20 7466 5000
    Tim Thompson
    Katharine Sutton
    Ben Romney