CEO Coastal Eng

Coastal Energy Company (the "Company" or "Coastal Energy") (TSX:CEN) (AIM:CEO), an independent exploration and production company with assets in Thailand, announces the financial results for the three and six months ended June 30, 2012. The functional and reporting currency of the Company is the United States dollar.

Second Quarter 2012 Highlights

- Total Company production increased to 21,713 boe/d in the second quarter from 9,494 boe/d in the same period last year. The Company's offshore production was 19,351 bbl/d, with the increase due to the inclusion of production from both platforms at Bua Ban North. Full production from Bua Ban North came on throughout January and February. Offshore production volumes in the second quarter were impacted by downtime for the replacement of an FSO at Bua Ban North. Onshore production of 2,362 boe/d increased from Q112 levels and year ago levels as natural gas demand continued to recover following the flooding in Thailand in late 2011 and was 3% above Q211 levels.

-  EBITDAX for Q2 2012 was $130.3 million, 230% higher than the $39.5 million recorded in Q2 2011. Revenue and EBITDAX were driven higher by increased oil liftings and commodity prices. Crude oil inventory was approximately 456,418 barrels at June 30, 2012 the revenue from which will be recognized in the third quarter. The Company reduced closing inventory levels by 112,840 barrels (approximately 20%) during Q2.

-  The Company announced successful discoveries in the Miocene and Oligocene reservoirs at Bua Ban South. The discoveries have been appraised and determined to be commercial. The Company purchased production facilities for Bua Ban South and will continue appraisal drilling once they arrive on location later in the third quarter.

-  The Company announced a Normal Course Issuer Bid to repurchase up to 5% of its outstanding shares (5,715,972 shares). To date, the Company has repurchased approximately 1.25 million common shares on the open market.

-  The Company announced that it had been awarded a Small Field Risk Services Contract by PETRONAS for the development of the Kapal, Banang & Meranti cluster of small fields offshore Peninsular Malaysia. Coastal will operate the fields for PETRONAS and will provide upfront development and operational capital. Coastal will recover 100% of its invested capital and will earn a remuneration fee which will be adjusted based on the timely implementation of the agreed field development plan and budget.

-  Following quarter end, the Company released the results of an interim third party reserves evaluation by its reserve auditor, RPS Energy Ltd. Total company 2P reserves increased to 149.1 mmboe from 102.1 mmboe at December 31, 2011

Operations Update

The Company drilled the Songkhla J-01 exploration well to a total depth of 8,600 feet TVD and encountered 168 feet of high quality sand in the Lower Oligocene reservoir with 19% porosity. Oil shows were observed throughout this section of the Lower Oligocene; however, MDT analysis indicates that this wellbore was near the oil water contact in this reservoir. Oil shows were also observed in the pre-tertiary limestone target, but porosity was below commercial levels. 

The rig is being mobilized to Songkhla A for development and appraisal drilling.

Randy Bartley, President and CEO of Coastal Energy, commented:

"The first half of 2012 has been an exceptional six months for Coastal. On top of record levels of production and cash flow, the Company has continued to deliver increases in reserves both through new exploration discoveries and appraisal drilling as well as core analysis on existing assets.

"We have been reinvesting our free cash flow to purchase some of the production facilities we were previously leasing for our offshore operations. This will reduce our fixed operating costs across all fields. The Company also announced an exciting expansion of our operations into Malaysia. This contract with PETRONAS is a low risk way for Coastal to enter a new country and we are very excited for our first new venture outside of Thailand.

"The Songkhla J-01 exploration well has very interesting implications for the basin. This is the farthest north and east that we've seen oil migration in the Songkhla basin to date. The secondary Lower Oligocene target had oil shows and great reservoir characteristics which will require further appraisal drilling to evaluate. We believe there is significant potential in the Lower Oligocene in updip fault blocks to the north and east of the J-01 well; however, these prospects extend beyond the boundaries of our current 3D seismic data. We are going to wait to drill further appraisal wells until we finish the acquisition and processing of additional 3D seismic which is currently underway. While the pre-tertiary target was below commercial thresholds in this particular location, we do not feel that there is any read-through to other pre-tertiary prospects in the basin based upon these results.

"We are moving the rig to Songkhla A to continue development and appraisal drilling to add to our existing production growth. We are also currently bidding on a second rig to begin work in the November 2012 time frame, which would allow our development and exploration programs to continue simultaneously." 

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, 2012 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 June 30,		Six months ended June 30,
	2012	2011	2012	2011
Revenues and Other Income
Oil sales	194,639	64,628	383,718	137,184
Royalties	(20,514)	(5,018)	(40,757)	(10,863)
Oil sales, net of royalties	174,125	59,610	342,961	126,321
Other income (Note 11)	9,778	(2,027)	(393)	(23,111)
	183,903	57,583	342,568	103,210
Expenses
Production	41,164	17,124	77,374	39,342
Depreciation and depletion (Note 6)	18,590	11,698	38,634	24,984
Net profits interest (Note 12)	869	--	869	--
General and administrative	7,057	6,457	15,384	11,720
Exploration (Note 5)	286	931	286	6,484
Debt financing fees	195	31	632	265
Finance	351	1,201	1,201	2,363
	68,512	37,442	134,380	85,158
Net income before income taxes, share of
net income from Apico LLC	115,391	20,141	208,188	18,052
Share of net income from Apico LLC (Note 7)	5,497	4,272	9,504	7,528
Net income before income taxes	120,888	24,413	217,692	25,580
Income taxes (Note 14)
Current	45,289	--	81,897	--
Deferred	32,095	12,005	43,798	15,188
	77,384	12,005	125,695	15,188
Net income and comprehensive income	43,504	12,408	91,997	10,392
Net income and total comprehensive income attributable to:
Shareholders of Coastal Energy	42,150	11,816	90,285	9,454
Non-controlling interest	1,354	592	1,712	938
	43,504	12,408	91,997	10,392
Net income per share:
Basic (Note 13)	0.37	0.11	0.79	0.08
Diluted (Note 13)	0.36	0.10	0.76	0.08
The accompanying notes are an integral part of these condensed interim consolidated financial statements.

As at	June 30, 2012	December 31, 2011
	$	$
Assets
Current Assets
Cash	116,646	22,995
Restricted cash (Note 3)	6,393	28,447
Accounts receivable (Note 4)	28,170	16,939
Derivative asset (Note 10)	48	59
Crude oil inventory	12,281	11,304
Marine fuel inventory	3,772	2,857
Prepaids and other current assets	1,056	1,094
Total current assets	168,366	83,695
Non-Current Assets
Exploration and evaluation assets (Note 5)	55,101	31,881
Property, plant and equipment (Note 6)	410,420	355,052
Investment in and advances to Apico LLC (Note 7)	66,452	47,698
Deposits and other assets	274	405
Total non-current assets	532,247	435,036
Total Assets	700,613	518,731
Liabilities
Current Liabilities
Accounts payable and accrued liabilities (Note 8)	159,218	59,471
Current portion of long-term debt (Note 10)	17	55,662
Current portion of derivative liabilities (Note 10)	3,935	14,557
Derivative liability - Warrants (Note 9)	2,408	2,853
Total current liabilities	165,578	132,543
Non-Current Liabilities
Long-term debt (Note 10)	47,482	22,156
Non-current portion of derivative liabilities (Note 10)	--	1,274
Deferred tax liabilities	113,565	69,767
Decommissioning liabilities	46,124	42,124
Total Non-Current Liabilities	207,171	135,321
Shareholders' Equity (Note 13)
Common shares	211,702	211,554
Contributed surplus	18,804	16,401
Retained earnings	92,156	17,630
Total Shareholders' Equity	322,662	245,585
Non-controlling interest	5,202	5,282
Total equity	327,864	250,867
Total liabilities and equity	700,613	518,731
Commitments and contingencies (Note 16)
The accompanying notes are an integral part of these condensed interim consolidated financial statements.

	Three months ended June 30,		Six months ended June 30,
	2012	2011	2012	2011
Operating activities
Net income	43,504	12,408	91,997	10,392
Adjustments:
Share of net income from Apico LLC	(5,497)	(4,272)	(9,504)	(7,528)
Unrealized (gain) loss on derivative instruments	(15,892)	(7,674)	(11,885)	10,513
Depletion and depreciation	18,590	11,698	38,634	24,984
Finance expense	195	1,417	1,201	2,363
Amortisation of debt financing fees	351	31	632	265
Share-based compensation	1,645	3,624	4,636	5,746
Deferred income taxes	32,095	12,005	43,798	15,188
Unrealized foreign exchange (gain) loss	(158)	308	(66)	457
Exploration expense	286	931	286	6,484
Income taxes paid	(129)	--	(129)	--
Interest received	1	1	3	2
Interest paid	(531)	(1,982)	(1,252)	(2,294)
Earnings Distributions from Apico LLC	--	1,265	--	2,168
	74,460	29,760	158,351	68,740
Change in non-cash working capital:
Accounts receivable	4,306	13,128	(11,231)	(1,793)
Inventory	3,584	(5,142)	(1,892)	(4,312)
Prepaids and other current assets	(710)	45	38	480
Accounts payable and accrued liabilities	11,124	(5,223)	(8,233)	890
Current income taxes payable	45,160	--	81,768	--
Cash flow provided by operating activities	137,924	32,568	218,801	64,005
Financing Activities
Issuance of common shares, net of issuance costs	1,034	749	2,026	5,442
Repurchase of shares	(15,033)	--	(15,033)	--
Borrowings under long-term debt	--	--	--	6,275
Repayment of long-term debt	--	--	(30,000)	--
Loan arrangement fees	(222)	(348)	(968)	(348)
Distributions to non-controlling interest	(1,792)	--	(1,792)	(156)
Other	--	(375)	--	(375)
Cash flow (used in) provided by financing activities	(16,013)	26	(45,767)	10,838
Investing Activities
Decrease (increase) in restricted cash	18	(11,036)	22,054	(4,503)
Expenditure on property, plant and equipment	(45,698)	(33,422)	(90,927)	(69,892)
Acquisition of increased ownership interest in Apico LLC	--	--	(9,250)	--
Advances to Apico LLC	--	(1,446)	--	(1,446)
Deposits and other assets	131	40	131	(3)
Cash flow used in investing activities	(45,549)	(45,864)	(77,992)	(75,844)
Effect of exchange rate changes on cash	(616)	(456)	(1,391)	(697)
Increase (decrease) in cash	75,746	(13,726)	93,651	(1,698)
Cash - Beginning of period	40,900	15,912	22,995	3,884
Cash - End of period	116,646	2,186	116,646	2,186
The accompanying notes are an integral part of these condensed interim consolidated financial statements.

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 Coastal Energy Company logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=10062

CONTACT: Enquiries:
         Coastal Energy Company
         Email: investor@CoastalEnergy.com
         +1 (713) 877-6793
         
         Strand Hanson Limited (Nominated Adviser)
         Rory Murphy / Paul Cocker / Scott McGregor
         +44 (0) 20 7409 3494
         
         Macquarie Capital (Europe) Limited (Broker)
         Paul Connolly / Jeffrey Auld
         +44 (0) 20 3037 2000
         
         FirstEnergy Capital LLP (Broker)
         Hugh Sanderson / Travis Inlow
         +44 (0) 20 7448 0200
         
         Buchanan
         Tim Thompson / Ben Romney
         +44 (0) 20 7466 5000