Coastal Energy Announces Discovery at Bua Ban North B

   Coastal Energy Company (the "Company" or "Coastal") (TSX-V: CEN) (AIM: CEO) announces 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 bbl/d. 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 benefitting 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."

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 Licensed Professional Geoscientist and a Certified Petroleum Geologist 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.

These securities have not been registered under United States Securities Act of 1933 (the "US Securities Act") or the securities laws of any state and may not be offered or sold in the United States or to US persons (as defined in Regulation S under the US Securities Act) unless an exemption from registration is available.

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Enquiries: Coastal Energy Company [phone] Email: Email Contact Strand Hanson Limited (Nominated Adviser) [phone] Rory Murphy Paul Cocker Macquarie Capital (Europe) Limited (Broker) [phone] Ben Colegrave Paul Connolly FirstEnergy Capital LLP (Broker) [phone] Hugh Sanderson Travis Inlow Buchanan Communications [phone] Tim Thompson Chris McMahon Ben Romney