Coastal Energy Co.
AIM : CEO
TSX VENTURE : CEN

Coastal Energy Co.

June 09, 2008 09:30 ET

Coastal Receives Government Approval to Develop Songkhla Field

LONDON, UNITED KINGDOM--(Marketwire - June 9, 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, announced today it has received government approval of the Production Area Application ("PAA") for development of its Songkhla field in the Gulf of Thailand.

The PAA was approved by the Department of Mineral Fuels, the governmental agency responsible for Thailand's upstream petroleum industry, and covers an extended area of approximately 75 square kilometers which includes not only the Songkhla field, but several surrounding satellite features. The extended production area is significant in that it enables the company to fully exploit the prospects surrounding the primary Songkhla development without the need to apply for additional government approvals. As approved, the production area contains Proved, Probable and Possible reserves of 6.4 MMBO. It also contains eight identified oil prospects with potential oil in place of over 200 MMBO. Songkhla is expected to begin production in the fourth quarter of this year.

The Songkhla field is scheduled to commence production in Q4, 2008 with production drilling expected to commence in August, 2008. Due to delays in the arrival of the Swiber Jack Up-1 ("JU-1") rig, the Company has revised its drilling programme to ensure first production from Songkhla is not affected by the rig delay.

Commenting on the Company's announcement about the recent events in Thailand, Coastal's Chief Executive, Randy Bartley said:

"The approval of the PAA for Songkhla area development is an important step in the development of Coastal's first oil production from the Gulf of Thailand. We are fortunate to have been granted a production area of this size because it covers not only the proven Songkhla development, but also the eight identified prospects. This will allow us to expedite the exploration and development of these prospects and will significantly enhance the overall economics of the project. We are very pleased with this outcome.

Due to the flexibility in our well scheduling, the JU-1 delay will not affect our projected fourth quarter first production from the Songkhla development. There will be sufficient time to pre-drill five to six development wells at Songkhla prior to platform arrival in late September 2008. Drilling of the Bua Ban appraisal wells is now scheduled to start in early 2009. Bua Ban has sufficient proved reserves, without additional drilling, to justify proceeding with platform and facility development. Drilling plans for the first nine Bua Ban wells will be late first and early second quarter 2009 to allow sufficient time to pre-drill the wells and to set platform and production facilities in late second quarter 2009."

Notes to Editors

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

- The Company specialises in identifying and developing under-exploited or "orphaned" or 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 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 45.5 million barrels oil equivalents(i)

- 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, which was producing in excess of 100 mmcf/d at the end of the first quarter 2008.

-- 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

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

(i) 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.

Frank Inouye, Executive Chairman and Director of the Company, and a member of the American Association of Petroleum Geologists, has reviewed the contents of this announcement.

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
    Executive 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
    Ann-Marie Wilkinson / Nick Lambert / Rosanne Perry
    +44 (0) 20 7861 3232
    or
    KBC Peel Hunt Ltd (Nominated Adviser)
    Jonathan Marren / Matt Goode
    +44 (0) 20 7418 8900