Coastal Energy Announces Onshore Operations Update

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

AIM: CEO

TSX-V: CEN

HOUSTON, Dec. 8 /CNW/ - Coastal Energy Company (the "Company" or "Coastal") (TSX-V: CEN, AIM: CEO), an independent exploration and production company with assets in Thailand, announces an update to its operations in Blocks L13/48 and L27/43 onshore Thailand.

Block L 13/48

The Si That -3 well has reached total depth of 2,775.6 meters and encountered the Pha Nok Khao formation. Gas shows were seen in the reservoir interval and log analysis indicates a fractured carbonate section. The well was acid washed and tested. During testing, gas and formation water were produced at varying rates; however, an attempt to identify the exact water source was unsuccessful due to a downhole obstruction. The operator is attempting to clear the obstruction and re-run the testing equipment. Following evaluation of the test results, the operator will determine how to proceed with a flow test of the well. The drilling rig has been released and demobilized while testing has continued using slickline and coiled tubing units. Coastal holds a net 21.7% working interest in Block L13/48 through a shareholding in APICO LLC.

Block L27/43

A hydraulic workover unit has been mobilized to the Phu Kheng-1 location and is rigged up. The operator plans to begin a hydraulic fracturing test of the Lower Nam Phong formation in the coming days. Coastal holds a net 36.1% working interest in Block L27/43 through a shareholding in APICO LLC.

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.

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

SOURCE COASTAL ENERGY COMPANY

For further information: 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 Hanson Limited (Nominated Adviser), Rory Murphy, Paul Cocker, +44 (0) 20 7409 3494; Thomas Weisel Partners (Broker), Paul Colucci, +44 (0) 20 7877 4300; Macquarie Capital (Europe) Limited (Broker), Ben Colegrave, Paul Connolly, +44 (0) 20 3037 2000; Buchanan Communications, Tim Thompson, Catherine Breen, Katharine Sutton, +44 (0) 20 7466 5000

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COASTAL ENERGY COMPANY

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