Coastal Energy Announces Second Quarter 2009 Financial Results



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

    AIM: CEO
    TSX-V: CEN
    

    HOUSTON, Aug. 31 /CNW/ - Coastal Energy Company ("the Company" or
"Coastal Energy") (TSX-V: CEN, AIM: CEO), an independent exploration and
production company with assets in Thailand, announces the financial results
for the quarter ended June 30, 2009. The functional and reporting currency of
the Company is the United States dollar.

    
    Second Quarter Highlights

    -   Average net offshore production of 6,702 bopd; average net onshore
        production of 2,080 boepd; average aggregate production of 8,782
        boepd.

    -   Total offshore production of approximately 610,000 bbls;

    -   EBITDAX of $15.0 million and $18.5 million, respectively, for the
        three and six months ended June 30, 2009.

    -   Net income from continuing operations (excluding impairment charges)
        of $3.6 million or $0.03 per share.
    

    Randy Bartley, Chief Executive Officer of Coastal Energy commented:
    "The second quarter of 2009 was a milestone for Coastal Energy as it
marked the first full quarter of production from the Company's Songkhla field
in the Gulf of Thailand.
    "Our contracted rig is currently in tow and is expected to arrive on
location at Songkhla Main this week. Two development wells and two water
injectors are planned to be drilled. The water injectors will help to
repressurize the reservoir and maintain the strong water drive, which will
bolster ultimate recovery factors. The injectors will also eliminate water
disposal costs. Following its development program at Songkhla Main, the rig
will commence drilling the Songkhla B (Lower Oligocene) exploration well. If
successful, two to four wells will be drilled at Songkhla B. We also plan to
mobilize a unit to workover the Songkhla A Lower Oligocene and Eocene wells in
mid-October, the Eocene well has been shut-in since early June.
    "Coastal Energy is entering an exciting period and we are optimistic
about our offshore development program and the potential value it could add to
the Company. We expect the second half of the year to bring further progress
in the development of our offshore assets and further success for Coastal."

    
    Note: EBITDAX is a non-GAAP measure and is defined as earnings before
    interest, financing fees, taxes, depreciation, amortization, exploration
    costs and other one-time items adjusted for non-cash items such as
    unrealized gains and losses on risk management contracts, unrealized
    foreign exchange gains or losses and stock-based compensation.
    

    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 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.

    
    (*) 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 to 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.
    

    The following financial statements for the Company are abbreviated
versions. The Company's complete financial statements for the three and six
months ended June 30, 2009 with the notes thereto and the related Management
Discussion and Analysis can be found either on Coastal's website at
www.CoastalEnergy.com or on SEDAR at www.sedar.com. All amounts are in US$
thousands, except share and per share amounts.


    
                                  Three months ended        Six months ended
                                             June 30,                June 30,
    (US$ 000s)                      2009        2008        2009        2008
    -------------------------------------------------------------------------

                                        (As restated            (As restated
                                              Note 2)                 Note 2)
    Revenues
      Crude oil                   28,017           -      36,217           -
      Royalties                   (1,880)          -      (2,421)          -
      (Loss) gain on
       derivative                   (836)         (8)     (1,923)         19
      Interest income                  5         270          16         515
    -------------------------------------------------------------------------
                                  25,306         262      31,889         534
    -------------------------------------------------------------------------

    Expenses
      Production                  $9,532           -     $12,852           -
      General and
       administrative              3,210       2,209       6,403       5,656
      Foreign exchange (gain)
       loss                        1,765      (1,773)      1,397       1,609
      Interest                     1,347         433       2,366         662
      Debt financing fees             26           -         926           -
      Depletion, depreciation
       and accretion               7,698          45      10,856          88
      Settlement                   2,365           -       2,365           -
    -------------------------------------------------------------------------
                                  25,943         914      37,165       8,015
    -------------------------------------------------------------------------

    Net income (loss) before
     taxes and earnings
     from significantly
     influenced investee            (637)       (652)     (5,276)     (7,481)

    Income tax expense                 -           -           -         666
    -------------------------------------------------------------------------

    Net income (loss)
     before earnings
     from significantly
     influenced investee            (637)       (652)     (5,276)     (8,147)

    Earnings from
     significantly
     influenced investee           1,854       3,607       3,264       6,475
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income (loss) and
     comprehensive income
     (loss)                       $1,217      $2,955     $(2,012)    $(1,672)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    EBITDAX(a)                    14,967       5,664      18,524       4,509

    Deficit, beginning of
     period                      (19,816)    (18,653)    (16,587)    (14,026)
    Deficit, end of period       (18,599)    (15,698)    (18,599)    (15,698)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings (loss) per share
      Basic and diluted             0.01        0.03       (0.02)      (0.02)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average
     number of common
     shares outstanding       95,551,050  93,573,249  94,596,190  92,888,277
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Note (a) EBITDAX is a non-GAAP measure and is defined as earnings before
    interest, financing fees, taxes, depreciation, amortization, exploration
    costs and other one-time items adjusted for non-cash items such as
    unrealized gains and losses on risk management contracts, unrealized
    foreign exchange gains or losses and stock-based compensation.



    -------------------------------------------------------------------------
                                                      June 30,   December 31,
    (US$ 000s)                                           2009           2008
    -------------------------------------------------------------------------

    Assets
    Current Assets
      Cash and cash equivalents                        $7,299         $6,434
      Restricted cash                                   3,476          4,146
      Accounts receivable                               2,227          2,391
      Derivative risk management contract                 220          2,016
      Crude oil inventory                               4,533            308
      Prepaids and other current assets                   820            271
    -------------------------------------------------------------------------
                                                       18,575         15,566

    Investments in and advances to Apico, LLC          56,350         50,376
    Property, plant and equipment, net                194,800        192,224
    Deposits and other assets                             428            297
    -------------------------------------------------------------------------
                                                     $270,153       $258,463
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
    Current liabilities
      Accounts payable and accrued liabilities        $27,608        $35,536
      Income taxes payable                                  -          1,252
      Amounts due to shareholder                        6,978          6,761
      Notes payable                                    11,248              -
      Current portion of long-term debt                10,574         15,249
    -------------------------------------------------------------------------
                                                       56,408         58,798

    Long-term debt                                     27,210         28,751
    Asset retirement obligations                        1,398          1,354
    Future income tax liability                        26,686         25,984
    -------------------------------------------------------------------------
                                                      111,702        114,887
    -------------------------------------------------------------------------

    Shareholders' equity
    Share capital                                     162,356        146,938
    Contributed surplus                                14,400         13,225
    Warrants                                              294              -
    Retained deficit                                  (18,599)       (16,587)
    -------------------------------------------------------------------------
                                                      158,451        143,576
    -------------------------------------------------------------------------
                                                     $270,153       $258,463
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                                  Three months ended        Six months ended
                                             June 30,                June 30,
    (US$ 000s)                      2009        2008        2009        2008
    -------------------------------------------------------------------------

                                        (As restated            (As restated
                                              Note 2)                 Note 2)
    Operating Activities
      Net income (loss) for
       the period                 $1,217       2,955     $(2,012)     (1,672)
      Distributions from
       significantly
       influenced investee         1,083           -       1,806           -
      Items not involving cash
        Depletion, depreciation
         and accretion             7,698          45      10,856          88
        Impairment                 1,765           -       1,765           -
        Interest expense               -          57           -         112
        Unrealized foreign
         exchange (gain) loss      1,295      (1,758)        909         189
        Stock based compensation   1,570          63       2,146       1,262
        Issuance of warrants
         with notes payable            -           -         294           -
        Share of earnings of
         significantly
         influenced investee,
         net of taxes             (1,854)      1,632      (3,264)     (1,236)
        Unrealized (gain) loss
         on risk management
         contract                    270           8       1,796         (19)
      Change in non-cash
       working capital
        Accounts receivable          589        (591)        164        (759)
        Crude oil inventory       (1,448)          -      (4,225)          -
        Prepaids and other
         current assets              226         (39)       (549)         84
        Accounts payable and
         accrued liabilities        (276)      1,746       8,480       2,293
    -------------------------------------------------------------------------
                                  12,135       4,118      18,166         342
    -------------------------------------------------------------------------

    Investing Activities
      Investment in and
       advances to Apico LLC     $(4,516)       (903)    $(4,516)       (903)
      Decrease (increase) in
       restricted cash              (436)         (8)        670         513
      Purchase of property,
       plant and equipment       (17,035)    (16,651)    (33,348)    (35,627)
      Other                         (128)         (5)       (131)          -
    -------------------------------------------------------------------------
                                 (22,115)    (17,567)    (37,325)    (36,017)
    -------------------------------------------------------------------------

    Financing Activities
      Issuance of shares
       for cash                  $15,418         317      15,418      54,875
      Borrowings under
       long-term debt              1,620      25,000       1,620      25,000
      Repayments of long-term
       debt                         (895)          -      (7,836)    (25,000)
      Borrowings under amounts
       due to shareholder              -           -       1,000           -
      Repayment of amounts due
       to shareholder             (1,121)          -      (1,121)          -
      Proceeds from issuance
       of notes payable                -           -      15,000           -
      Repayments of notes
       payable                    (3,072)          -      (4,072)          -
    -------------------------------------------------------------------------
                                  11,950      25,317      20,009      54,875
    -------------------------------------------------------------------------

    Net effect of foreign
     exchange on cash held
     in foreign currencies            63          21          15           6
    -------------------------------------------------------------------------

    Change in cash and cash
     equivalents                   2,033      11,889         865      19,206
    Cash and cash equivalents,
     beginning of period           5,266      20,466       6,434      13,149
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                 7,299      32,355       7,299      32,355
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash and cash equivalents
     consists of:
      Cash                         3,823       7,005       3,823       7,005
      Short-term money
       market instruments          3,476      25,350       3,476      25,350
    -------------------------------------------------------------------------
                                   7,299      32,355       7,299      32,355
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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:

For further information: 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; Buchanan Communications, Tim Thompson, Catherine
Breen, Katharine Sutton, +44 (0) 20 7466 5000

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COASTAL ENERGY COMPANY

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