Coastal Completes Songkhla A-02 in Gulf of Thailand

Coastal has announced the completion of the Songkhla A-02 development well on Block G5/43 in the Gulf of Thailand, and has issued an operations update.

Songkhla A-02 Results

The Songkhla A-02 well was drilled to a total measured depth of 8,804 feet (2,684 meters) and logged approximately 98 feet (30 meters) of net pay with 20% porosity in the Lower Oligocene primary reservoir. Completion casing has been run and the well has been perforated. The well was cleaning up and flow testing over 3,000 bopd when a sudden increase in water production occurred from a suspected channel in the cement behind the production casing. The well is currently producing 1,500 bopd.

The Songkhla A-05 injection well was spud on October 4 and was drilled to a total measured depth of 8,770 feet (2,673 meters). The well will be logged and evaluated in the coming days to determine the prospectivity of the early Miocene, which has been identified as a potential secondary target. The Company currently plans to continue producing the A-02 well while finishing drilling the A-05 injection well and the A-04 development well. Upon completion of these two wells, a remedial cement squeeze and repair operation will be performed on A-02. The repair work is expected to take 7 - 8 days.

Randy Bartley, Chief Executive Officer of Coastal Energy, commented, "Initial indications on the Songkhla A-02 from logging, wireline testing and initial flow testing were as anticipated. Wireline test data indicated only minor movement of the oil water contact in the Lower Oligocene reservoir from an initial expectation of 7,526 feet to 7,500 feet subsea. It now appears that a mechanical cementing issue has affected well performance. We expect to repair this immediately following completion of the Songkhla A-04 development well and restore the well to its initial expected production rates of 3,000 bopd. Other than the addition of repair work on the A-02 well, the drilling program continues to move forward as planned."

Operations Update

Coastal entered into a contract with EOC Limited to charter a heavy lift barge for installation of its fixed platforms at its Bua Ban field on Block G5/43 in the Gulf of Thailand. The installation is expected to begin in the first quarter of 2010 and cost approximately $11.2 million. The facilities installation will facilitate the development drilling of Bua Ban in 2010.

The Company also announced an update of its onshore operations in Block L27/43. Testing of the Phu Kheng-1 exploration well is expected to be delayed until mid-November due to delays in mobilizing equipment. Initial evaluation results are expected in late 2009. As announced September 7, 2009, Phu Kheng-1 encountered gas-saturated Jurassic and Triassic sandstones in the Phu Kradung and Nam Phong formations.