Coastal Energy Announces Spudding of Phu Kheng-1 Exploration Well

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

    AIM: CEO
    TSX-V: CEN

    HOUSTON, July 2 /CNW/ - Coastal Energy Company (the "Company" or
"Coastal") (TSX-V: CEN, AIM: CEO), an independent exploration and production
company with assets in Southeast Asia, announces that the Phu Kheng-1
exploration well on Block L27/43 located in the Khorat Basin in Northeast
Thailand was spudded on July 2, 2009. The well is planned to be drilled to a
total depth of 2,070 meters sub-sea and is expected to take approximately 40
days to drill on a dry-hole basis, with testing to be completed immediately if
the well is successful. Coastal is the largest holder in Block L27/43 with a
36.1% net working interest.
    The Phu Kheng-1 well will be targeting shallower Jurassic and Triassic
gas shows seen in the Dong Mun 3 appraisal well. The Phu Kheng formation has
mean gross prospective resources of 1.36 tcf per Huddleston & Co.'s reserves
evaluation effective December 31, 2008, or 491 bcf net to Coastal. Following
the drilling of the Phu Kheng-1 well, the rig will be mobilized and used to
drill the Si-That 3 appraisal well on Block L13/48, in which Coastal has a net
21.7% working interest.
    Randy Bartley, President and Chief Executive Officer of Coastal Energy
commented:
    "The Phu Kheng-1 well will be testing shallower Dong Mun gas shows in an
optimal structural position. If successful, the well will add significant
resources located adjacent to the existing infrastructure of the Sinphuhorm
field. The resource potential of L27/43 could be significant enough to
encourage further gas sales infrastructure investment in the Khorat Basin."

    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.

    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.

For further information: Enquiries: Coastal Energy Company, Randy L.
Bartley, Chief Executive Officer, (713) 877-6705; William C. Phelps, Chief
Financial Officer, (713) 877-6727, Email: investor@CoastalEnergy.com; Strand
Partners Limited (Nominated Adviser), Rory Murphy, +44 (0) 20 7409 3494;
Thomas Weisel Partners (Broker), Paul Colucci, +44 (0) 20 7877 4300; Tristone
Capital (Broker), Majid Shafiq, +44 (0) 20 7355 5800; Bell Pottinger Corporate
& Financial, Nick Lambert/Rosanne Perry, +44 (0) 20 7861 3232