Coastal Tests Positive Production Flow at Songkhla A-01

Coastal Energy has completed a successful flow test of the Songkhla A-01 well. The Songkhla A-01 well was drilled to a total measured depth of 9,025 feet (2,750 meters) and logged approximately 125 feet (41 meters) of net pay with 20% porosity in the Lower Oligocene primary reservoir.

Geological highlights include:

  • Approximately 53 feet (16 meters) more net pay than encountered in the original well, which was measured at 82 feet of net pay with 19% porosity by Huddleston & Co, Inc.
  • The top of the main Oligocene pay zone seen in the original Songkhla #1 well ("the original well") came in as prognosed at 7,252 feet (2,210 meters) true vertical depth, which is approximately 86 feet (26 meters) structurally higher than the original well.
  • Another Lower Oligocene pay zone, not seen in the original well, was encountered above the two previous known pay zones. This interval added an approximate additional 15 feet (4.5 meters) of pay that is 160 feet (49 meters) structurally higher than the previously known pay zone in the original well.

Following the initial flow test, an extended production test began on November 3, 2008 and is expected to last through December. The well is currently producing in excess of 4,500 barrels of oil per day with no water production using an Electric Submersible Pump ("ESP"). The oil is a medium sweet grade with API gravity of 29 degrees and 0.24% sulfur content and will initially be marketed to a local Thai refinery.

Randy Bartley, Chief Executive Officer of Coastal Energy commented, "We are very pleased with the results of the Songkhla A-01 well. We logged 65% greater net pay than the original Songkhla well. The current flow rate is significantly higher than the rate we were using in our financial presentation. The extended production test will continue while we drill additional wells on the Songkhla main structure."

The Company also announced that it spudded the Songkhla A-03 well on November 1, 2008 and is currently drilling at 2,500 feet (762 meters) true vertical depth. Songkhla A-03 is the second in the development of the Songkhla field. The well is expected to be drilled to a total depth of approximately 7,900 feet (2,408 meters) true vertical depth.

In August 2008, Coastal's wholly owned subsidiary signed a LOI with Deep Drilling 7 Pte. Ltd. for a three-month charter of the newbuild jackup rig Deep Driller 7, which is being used to drill several wells in the Songkhla block.

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