Coastal Energy Company Operations Update (1201T)

TIDMCEO

RNS Number : 1201T

Coastal Energy Company

10 December 2012

TSX: CEN December 10, 2012

AIM: CEO

Coastal Energy Announces Update

Coastal Energy Company (the "Company" or "Coastal Energy") (TSX: CEN, AIM: CEO), an independent exploration and production company with assets in Thailand, today provided an update of its operations.

Second Rig Arrives on Location

The Atwood Manta has arrived on location at the Bua Ban North B field and is currently rigging up. The Company plans to drill eight development and appraisal wells at Bua Ban North with the Manta. Following completion of these eight wells, the Company plans to mobilize the Manta to the KBM cluster offshore Malaysia in early Q213 to begin appraisal drilling there.

Pilot Offshore Fracturing Program

The Company has recently tested hydraulic fracturing ("fraccing") with a three stage fracturing program in the Lower Oligocene in the Bua Ban South A-01 well. All three zones which were fracced have flowed back oil naturally during cleanup. The well will be completed with an electric submersible pump (ESP) for longer term production testing. The fraccing program will now continue on the Bua Ban South A-03ST#1.

Randy Bartley, President & CEO of Coastal Energy commented:

"We continue to be pleased with our operational results and achievements during the year. We are now looking forward to accelerating the 2013 development and appraisal drilling campaign with our second rig. The addition of this second rig will permit us to grow production while continuing to exploit our substantial prospect inventory in parallel. The company's production currently is averaging over 24,000boepd (22,000 bopd offshore and 2,300 boepd onshore).

"Additionally, the initial results from the pilot fraccing program are very encouraging. The initial natural flowback rates during cleanup exceeded 800 bbl/d in aggregate. We expect that we will be able to further refine the fraccing methodology to be able to unlock the full resource potential in the lower porosity and permeability sands in the Songkhla basin."

Amendment to Incentive Stock Option Plan

The Board of Directors has amended the Company's Incentive Stock Option (ISO) plan to include a provision whereby the Company can, at its discretion, elect to settle ISO exercises with cash equal to the fair market value of the shares less the exercise price instead of issuing shares.

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 Certified Petroleum Geologist and a Licensed Professional Geoscientist 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.

Enquiries:

Coastal Energy Company

Email: investor@CoastalEnergy.com

+1 (713) 877-6793

Strand Hanson Limited (Nominated Adviser)

+44 (0) 20 7409 3494

Rory Murphy / Andrew Emmott

Macquarie Capital (Europe) Limited (Broker)

+44 (0) 20 3037 2000

Jeff Auld

FirstEnergy Capital LLP(Broker)

Hugh Sanderson / Travis Inlow