Coastal Strikes Again at Bua Ban North

- Coastal Strikes Again at Bua Ban North

Wednesday, May 25, 2011
Coastal Energy Co.

Coastal announced the successful results of the Bua Ban North B-05 exploration well.

The Bua Ban North B-05 well was drilled to 7,600 feet TVD and encountered 178 feet of net pay in the Miocene objective with average porosity of 27%. The B-05 is currently being cased and will then be suspended pending the arrival of testing equipment. The Company then plans to spud the B-04 well to appraise the Miocene reservoir updip from the discovery in the B-01 well.

The Company's offshore production is currently averaging 8,500 bopd. Onshore production is averaging 2,000 boe/d, bringing total Company production to 10,500 boe/d.

Randy Bartley, Chief Executive Officer of Coastal Energy, commented, "The B-05 well was designed to encounter maximum net pay by drilling along the bounding fault plane within a single structural trap. The Bua Ban North A-03 well was drilled with a similar well design and had similar results. We plan to utilize this drilling technique in future wells to optimize pay zones.

"Given the exceptional results thus far at Bua Ban North B, we have decided to divert the MOPU from Bua Ban North A to begin testing Bua Ban North B first. We are in the process of procuring an additional MOPU for Bua Ban North A, which we expect to be on location during the third quarter.

"The results of the B-05 further validate the tremendous upside potential of the Miocene trend in the Songkhla basin. Based on recent drilling results, we believe the Miocene trend extends into the central part of the basin and becomes shallower as it moves east. Once appraisal work is completed at Bua Ban North B and testing has begun, we plan to move the rig to a new location further to the east to continue exploring the Miocene trend.

"Production at Songkhla A has fallen recently due to declining rates from the wells drilled in Q410 and Q111. These three wells discovered new reservoirs which are not in communication with the main Songkhla reservoir and consequently are not benefiting from existing water injection wells. We are planning to drill water injection wells on these reservoirs to restore aquifer support and production rates once EIA approval is received, which is expected within two months."

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