Coastal Energy Announces 2nd Quarter 2007 Financial Results And Restated 1st Quarter Financial Results


    HOUSTON, TX, Aug. 29 /CNW/ - Coastal Energy Company (the "Company")
(TSX-V: CEO, AIM: CEO), the independent exploration and production company
with core assets in South-East Asia, announced today the results for the three
months ended June 30, 2007. Second quarter highlights include:

    -   Net earnings from investment in APICO, LLC of US $2,148,000 based on
        net operating income of US $3,680,000
    -   Net loss of US $1,688,000 or US $(0.01) per share basic and diluted
    -   Total assets of US $130,312,000

    The Company's earnings from its investment in APICO, LLC represent the
Company's net 12.6% interest in the Phu Horm gas field. Aggregate gas
production in the Phu Horm field was producing in excess of 90 million cubic
feet of gas per day ("mmfc/d") during the second quarter.
    In the second quarter, the Company secured US $50 million of borrowing
based credit facilities, maturing on December 31, 2013, arranged by Sumitomo
Mitsui Banking Corporation Europe Limited. The closing took place in early
July 2007, at which time over US $40 million was available for drawdown.
    Also in the second quarter, the Company incurred US $2.0 million non-cash
loss on its investment in its Nevada oil and gas properties. These properties
were written down to nil in anticipation of formal abandonment of these
properties, which was consummated in August 2007.
    The Company's offshore operations in block G5/43 continue to be focused
on developing and maturing the discovered assets in the Songkhla basin.
Engineering work related to platform design for the Songkhla oilfield is
nearing completion with fabrication of the platforms expected to commence in
Q4, 2007. Technical evaluation over several of the other discovered fields in
the basin continues with the interpretation of the 330 sq. km. high resolution
3D seismic survey that was acquired earlier in the year. Included in the
evaluation is the Bua Ban field which has four appraisal wells and is the
second field the company is looking to develop over the next 12-18 months.
During the second quarter the Company also acquired the Ocean 66 jack-up
platform that is currently being refurbished for use in the development
operations in the Gulf of Thailand.
    Commenting on the results, Frank Inouye, CEO of Coastal said, "The
Company has made significant progress during the second quarter of the year
especially in regard to developing the offshore assets. The development of the
Songkhla oilfield remains a priority for the Company and is expected to make a
material impact on our production profile in 2008. Onshore production from the
Phu Horm gas field continues to provide Coastal with a stable cash flow and
additional funding has been secured with a US$50 million credit facility.
Overall, the Company is in excellent shape to be able to meet our near term
corporate objective of increasing cash flow and production."

    Restatement of 1st Quarter
    In addition, the Company has been informed by Apico, LLC ("Apico") that
Apico incorrectly reported its earnings for the three months ended March 31,
2007. The Company accounts for its 36.1% investment in Apico under the equity
method of accounting whereby it records its share of Apico's earnings as
earnings from significantly influenced investee. In Apico's previously
released first quarter financial statements, Apico primarily incorrectly
reported an accrual for local country income taxes. However, Apico has since
adjusted its income statement, including its income tax provision for the
period ended March 31, 2007. As a result of Apico's adjustments, the Company
must now restate its earnings for the three months ended March 31, 2007. The
result of this restatement is to reduce net income by US $1.5 million.
    The effects of the restatement are summarized in the table below:

    In US $000's                                    As Reported  As Restated
    Statement of Operations and Deficit:
    Share of Earnings from Significantly
     Influenced Investee, net of taxes                $   3,044    $   1,563
    Net Income (Loss)                                 $     742    $    (739)
    Earnings per share, basic and diluted             $    0.00    $    0.00

    Balance Sheet
    Investments in and Advances to Apico, LLC         $  47,541    $  46,090
    Total Assets                                      $ 130,884    $ 129,403

    The 2nd quarter financial statements and related Management's Discussion
and Analysis as well as the Amended 1st quarter financial statements and
updated Management's Discussion and Analysis reflecting these changes have
been filed on SEDAR ( and the Company's website

    On behalf of Coastal Energy Company
    "Frank Inouye"
    Chief Executive Officer & Director

    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, 2007 with the notes thereto and the Company's Management
Discussion and Analysis can be found either on the Company's website at or on SEDAR at All amounts are in
US$000s, except share and per share amounts

                                Three months ended          Six months ended
                                           June 30,                  June 30,
    (US$ 000's)                  2007         2006         2007         2006
      Salaries and
       benefits             $     485    $       8    $     915    $      18
      Professional Fees           232            2          525            3
      Stock based
       compensation               259            -          427            -
      Office and general          245            9          410           23
      Other                       259            3          498           15
      Write-down of unproved
       oil & gas properties     2,034                     2,034
                                3,514           22        4,809           59
    Other Items
      Share of Apico, LLC
       (earnings) loss, net    (2,148)          80       (3,711)          89
      Loss on sale of assets       40            -           40            -
      Foreign exchange (gain)
       loss                       282          (19)       1,289          (88)
                               (1,826)          61       (2,382)           1
    Net income (loss) and
     comprehensive income
     (loss)                 $  (1,688)   $     (83)   $  (2,427)   $     (60)
    Earnings per share,
     basic and dilutive     $   (0.01)   $    0.00    $   (0.01)   $    0.00
    Weighted average number
     of common shares
     outstanding, basic
     and dilutive         307,435,635  151,663,323  307,434,269  151,663,323

                                                        June 30, December 31,
    As at (US$ 000's)                                      2007         2006
    Cash and cash equivalents                         $   7,226    $  18,350
    Accounts receivables and other                          886          490
                                                          8,112       18,840

    Investments in and advances to Apico                 48,239       44,046
    Property, plant and equipment, net                   72,727       68,784
    Other long-term assets                                1,234          394
                                                      $ 130,312    $ 132,064
    Accounts payable and accrued expenses             $   3,792    $   4,820
    Amounts due to shareholder                            4,829        4,724
    Future income tax liability                          26,273       25,153
                                                         34,894       34,697

    Shareholders' equity                                 95,418       97,367
                                                      $ 130,312    $ 132,064

    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: please visit our website:
or contact: Coastal Energy Company, Frank A. Inouye, Chief Executive Officer,
+44 (0) 148 354 9555; William C. Phelps, Chief Financial Officer, (713)
877-6727, Email:; KBC Peel Hunt, Ltd., Jonathan
Marren, +44 (0) 20 7418 8990; Bell Pottinger Corporate & Financial, Ann-marie
Wilkinson, Nick Lambert, Rosanne Perry, +44 (0) 20 7861-3232

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