Coastal Energy Announces First Quarter 2009 Financial Results


    AIM: CEO
    TSX-V: CEN

    HOUSTON, May 29 /CNW/ - Coastal Energy Company ("the Company" or "Coastal
Energy") (TSX-V: CEN, AIM: CEO), an independent exploration and production
company with assets in Southeast Asia, announces the financial results for the
first quarter ended March 31, 2009. The functional and reporting currency of
the Company is the United States dollar.

    First Quarter Financial Highlights

    -   Revenue from offshore operations of $6.6 million. First offshore
        platform production commenced in late February 2009.

    -   $1.4 million of earnings from Coastal's 36.1% investment in APICO
        LLC, whose primary asset is the Phu Horm gas field.

    -   Net loss from continuing operations of $3.2 million or $0.03 per

    -   Total assets increased to $266.9 million from $258.4 million at
        December 31, 2008

    First Quarter Operational Highlights

    -   First platform production from the Company's Songkhla field commenced
        in late February 2009. Current offshore production from Songkhla is
        approximately 7,500 bopd.

    -   The Phu Horm gas field, in which the Company has a net 12.6% indirect
        interest, is currently producing in excess of 100 mmcf/d.

    Randy Bartley, Chief Executive Officer of Coastal Energy commented:
    "The Company made important progress during the first few months of 2009.
We completed the installation of a Mobile Offshore Production Unit (MOPU) at
the Songkhla field offshore Thailand in late February 2009 and began producing
from the Songkhla Main A-01 and A-03 wells at that time. The A-07 Eocene well
was brought online in mid-April. Combined production from the three wells at
Songkhla is currently 7,500 barrels of oil per day, bringing total overall
production to 9,250 barrels of oil equivalent per day, including 1,750 boepd
of onshore gas production at Phu Horm.
    "In March 2009 we entered into a pre-sale agreement for 1,000,000 barrels
of crude oil. Our counterparty prepaid us for the total amount based on the
prevailing crude price at the time with a price adjustment payment to be made
at the end of the contract to reflect realized crude prices over the contract
term. This transaction closed in early April 2009 and the proceeds helped to
significantly strengthen our working capital position.
    "As we move further into 2009 we remain focused on our stated goal of
continuing to develop our Gulf of Thailand concessions. We plan to begin
further development of the Songkhla field and satellite structures in late
third quarter 2009. We are optimistic about the prospects for the Company for
the remainder of 2009 and we expect the second half of the year to bring
further progress in the development of our offshore assets and further success
for Coastal."

    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
    Additional information may be found on the Company's website, or may be found in documents filed on SEDAR,
    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 months
ended March 31, 2009 with the notes thereto and the related Management
Discussion and Analysis can be found either on Coastal's website or on SEDAR All amounts are in US$
thousands, except share and per share amounts.

                                                        Three months ended
                                                              March 31,

    (US$ 000's)                                          2009           2008
                                                                (as restated
                                                                      Note 2)
      Crude Oil                                         8,200              -
      Royalties                                          (541)             -
      (Loss) Gain on derivative
       risk management contract (Note 8)               (1,087)            27
      Interest Income                                      11            245
                                                        6,583            272

      Production                                   $    1,746     $        -
      General and administrative                        3,193          3,447
      Foreign exchange (gain) loss                       (368)         3,382
      Interest (Note 11)                                1,019            229
      Debt financing fees (Note 11)                       900              -
      Depletion, depreciation and accretion             4,732             43
                                                       11,222          7,101

    Loss before taxes and earnings from
     significantly influenced investee                 (4,639)        (6,829)

    Income taxes (Note 14)                                  -            666

    Loss before earnings from significantly
     influenced investee                               (4,639)        (7,495)

    Earnings from significantly influenced
     investee (Note 4)                                  1,410          2,868

    Net earnings (loss) and
     comprehensive earnings (loss)                 $   (3,229)    $   (4,627)
    Deficit, beginning of period                      (16,587)       (14,026)
    Deficit, end of period                            (19,816)       (18,653)

    Earnings (loss) per share, basic
     and dilutive                                 ---------------------------
      From continuing operations                        (0.03)         (0.05)

    Weighted average number of common
     shares outstanding, basic and diluted         93,630,720     92,195,694

                                                     March 31,   December 31,
    (US$ 000's)                                          2009           2008

    Current Assets
      Cash and cash equivalents                    $    5,266     $    6,434
      Restricted cash (Note 3)                          3,040          4,146
      Accounts receivable                               2,816          2,391
      Derivative risk management contract
       (Note 8)                                           490          2,016
      Crude oil inventory                               3,085            308
      Prepaids and other current assets
       (Note 7)                                         1,046            271
                                                  -------------  ------------
                                                       15,743         15,566

      Investments in and advances
       to Apico, LLC (Note 4)                          51,063         50,376
      Property, plant and equipment, net
       (Note 5)                                       199,829        192,224
      Deposits and other assets                           300            297
                                                  -------------  ------------
                                                   $  266,935     $  258,463
                                                  -------------  ------------
                                                  -------------  ------------

    Current liabilities
      Accounts payable and accrued liabilities     $   38,459     $   35,536
      Current income tax expense (Note 14)              1,252          1,252
      Amounts due to shareholder (Note 6)               7,831          6,761
      Notes payable (Note 7)                           14,096              -
      Current portion of long-term debt
       (Note 8)                                         5,830         15,249
                                                  -------------  ------------
                                                       67,468         58,798

      Long-term debt (Note 8)                          31,229         28,751
      Asset retirement obligations (Note 9)             1,376          1,354
      Future income tax liability (Note 14)            25,554         25,984
                                                  -------------  ------------
                                                      125,627        114,887
                                                  -------------  ------------
                                                  -------------  ------------

    Commitments and contingencies (Note 15)

    Shareholders' equity
      Share capital (Note 9)                          146,938        146,938
      Contributed surplus (Note 9)                     13,892         13,225
      Warrants                                            294              -
      Retained deficit                                (19,816)       (16,587)
                                                  -------------  ------------
                                                      141,308        143,576

                                                  -------------  ------------
    Total liabilities and shareholders' equity     $  266,935     $  258,463
                                                  -------------  ------------
                                                  -------------  ------------

    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: Enquiries: Coastal Energy Company, Randy L.
Bartley, Chief Executive Officer, (713) 877-6705; William C. Phelps, Chief
Financial Officer, (713) 877-6727, Email:; 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

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