Coastal to Put Songkhla A-03 On Stream in Late November

Coastal Energy has successfully completed drilling the Songkhla A-03 well.

The Songkhla A-03 well was drilled to a total measured depth of 9,500 feet (2,895 meters) and logged approximately 110 feet (34 meters) of net pay with 18% porosity in the Lower Oligocene primary reservoir. The well came in approximately 47 feet high compared to the A-01 well.

Completion casing has been run and the rig has commenced drilling operations on the Songkhla A-07 well. The Company plans to complete the Songkhla A-03 and A-07 wells once an additional tanker is on location in late November.

The A-01 well has been on production since November 3rd and has been producing approximately 5,000 barrels of oil per day with no water. The first lifting of 25,000 barrels of crude oil from Songkhla A-01 occurred on November 10, 2008. A tanker is currently transporting the crude to a local Thai refinery. Liftings are expected to occur approximately every five (5) days.

The current development plan is to drill and complete 3 wells with 1 water disposal well before the rig release in late December. A mobile offshore production unit (MOPU) will be installed once the Deep Driller 7 rig is off location. Once the MOPU is set, production will resume from 3 wells, with expected total production of 9,000 barrels of oil per day from Songkhla. Including the existing gas production from the onshore Phu Horm gas field, in which Coastal has a 12.6% indirect interest, total production is estimated to be approximately 11,000 barrels of oil equivalent per day by the end of 2008.

Randy Bartley, Chief Executive Officer of Coastal Energy, commented. "We are very pleased with the results of the Songkhla A-03 well. The well performance is expected to be as good as that of the current producing A-01 well. Interpretation of the logs has confirmed the quality of the primary reservoir. The A-01 productivity of approximately 5,000 barrels of oil per day with limited reservoir pressure drawdown is a very good indicator for well performance. Once we have finalized our initial drilling program on this structure we will test the remaining wells and perform the necessary operations to prepare for permanent production."

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