Coastal Energy Co.
AIM : CEO
TSX VENTURE : CEN

Coastal Energy Co.

May 06, 2008 09:30 ET

Coastal Energy Announces Sinphuhorm Field Update

LONDON, UNITED KINGDOM--(Marketwire - May 6, 2008) -

THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH UNITED STATES NEWSWIRE SERVICES

Coastal Energy Company (the "Company" or "Coastal") (TSX VENTURE:CEN)(AIM:CEO), an independent exploration and production company with assets in South-East Asia, announces today the drilling results for the South Phu Horm 1 appraisal well.

South Phu Horm (SPH-1) Appraisal Well

The SPH-1 well was drilled to a total depth of approximately 3229 meters (-2,640 meters sub-sea) and encountered gas shows in both the Hua Hin Lat and Pha Nok Khao (PNK) formations. A full suite of logs were run and an open hole test conducted across the PNK primary target interval. The SPH-1 well tested gas at rates, after acid stimulation, that would not support commercial production from this location. The drilling, log and test data suggest the fracturing necessary to provide effective deliverability in the PNK carbonates is not present at the SPH-1 location and the well has been suspended pending further evaluation for a side track.

Sinphuhorm Field (Production Licenses EU1/E5N)

The Sinphuhorm gas field continues to produce above expectations at an average of 86.5 mmcf/d year to date, with the gas achieving an average price of $7.05 per mcf, ($5.96 per mcf average price for 2007). The Daily Contract Quantity was increased in March 2008 to 92 mmcf/d, and the field has demonstrated an ability to meet this expanded rate without any issues.

There is strong regional demand for gas in Northeast Thailand and the field partners firmly believe that there is capacity from the existing development to meet the increase in demand, and that the field is capable of producing in excess of 100 mmcf/d, through the existing wells and infrastructure.

Randy Bartley, Chief Executive Officer of Coastal commented: "The results of the South Phu Horm Well were non-commercial, but will have negligible effect on our latest published reserve report. The field continues to perform well and we plan to come back later in the year and drill additional exploration and appraisal wells on our onshore properties. The area has large gas potential that will be developed to meet the growing demand for energy in Thailand.

Our focus continues to be on obtaining first oil production from our offshore Gulf of Thailand assets in the 4th quarter. All is on schedule to meet this target."

Notes to Editors

- Coastal Energy is an oil and gas exploration, development and production company, with core assets onshore and offshore Thailand.

- The Company specializes in identifying and developing under-exploited or "orphaned" assets. Management has proven experience at identifying and unlocking value from overlooked, abandoned, low risk assets with proven hydrocarbon potential

- This strategy has enabled the Company to assemble an asset base in Thailand that includes production of approximately 11.5 mmcf/d of gas under a long-term contract and offshore oil fields currently under development

- Production growth over the next 12-18 months is expected to grow exponentially and proven, probable and possible reserves are 53.6 million barrels oil equivalents

- The Company's current assets include:

- Offshore Thailand

-- 100% of block G5/43 - two oil fields currently under development with several other appraisal and exploration opportunities. Production is expected to commence Q4 2008

-- 100% of block G5/50 - within the boundaries of block G5/43 in the Ko Kra basin

- Onshore Thailand

-- 12.6% net interest in blocks EU1 and E5N which include the Phu Horm gas field currently producing between 90 and 100 mmcf/d

-- 36.1% net interest in block L15/43 surrounding the Phu Horm field

-- 36.1% net interest in block L27/43 - containing the undeveloped Dong Mun gas field

-- 21.7% net interest in block L13/48 located adjacent to blocks L15/43 and L27/43, contains Si That discovery

For additional information, please visit the Company's website, www.coastalenergy.com or SEDAR, www.sedar.com for publicly filed documents.

Per barrel of oil equivalent ("boe") amounts have been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil equivalent (6:1). The term boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6mcf: 1bbl of oil is based upon an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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"

Contact Information

  • Coastal Energy Company
    Frank Inouye
    Chairman
    +44 (0) 1483 549 549
    or
    Coastal Energy Company
    Randy L. Bartley
    Chief Executive Officer
    (713) 877-6705
    or
    Coastal Energy Company
    William C. Phelps
    Chief Financial Officer
    (713) 877-6727
    Email: investor@coastalenergy.com
    Website: www.coastalenergy.com
    or
    Bell Pottinger Corporate & Financial
    Nick Lambert
    +44 (0) 20 7861 3232 / 07811 358 764
    or
    KBC Peel Hunt Ltd (Nominated Adviser)
    Jonathan Marren / Matt Goode
    +44 (0) 20 7418 8900