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Press release from GlobeNewswire (a Nasdaq OMX company)

Coastal Energy Announces Results of Third Party Interim Reserves Evaluation

Tuesday, July 31, 2012

Coastal Energy Announces Results of Third Party Interim Reserves Evaluation17:00 EDT Tuesday, July 31, 2012HOUSTON, July 31, 2012 (GLOBE NEWSWIRE) -- Coastal Energy Company (the "Company" or "Coastal Energy") (TSX:CEN) (AIM:CEO) announces the results of an interim third party evaluation of its onshore and offshore reserves in Thailand. RPS Energy Ltd. ("RPS") prepared a report dated July 30, 2012, with an effective date of March 31, 2012, in accordance with the guidelines established by the Society of Petroleum Engineers ("SPE"). The RPS report was prepared to incorporate the Company's drilling results at Bua Ban North & South in 2012 as well as information from core analyses which were completed subsequent to the RPS report published on March 27, 2012, which had an effective date of December 31, 2011. All comparisons made use the reserve numbers from the report effective December 31, 2011 as the base.  Offshore Proved reserves (1P) increased by 30% to 81.0 mmbbl and offshore Proved plus Probable reserves (2P) increased by 60% to 127.7 mmbbl. Total company Proved reserves (1P) increased by 26% to 87.9 mmboe and total company Proved plus Probable reserves (2P) increased by 45% to 149.1 mmboe. The following table presents a summary of the recoverable oil volumes:(in mboe)Offshore (Oil)Onshore (Gas)TotalClassBua Ban NorthSongkhla ABua Ban SouthBua Ban MainSongkhla HOtherSinphuhormDong Mun  1P 72.0 6.0 2.6 0.4 0.0 0.0 6.9 0.0 87.9 2P 108.3 11.7 5.3 1.5 0.9 0.0 21.4 0.0 149.1 3P 122.0 16.3 20.0 2.7 0.9 0.0 24.6 0.0 186.5 Contingent Resources 0.2 5.6 0.3 2.4 0.0 0.0 2.8 10.0 21.3  Prospective Resources 45.2 69.0 5.2 3.6 8.0 122.4 13.7 17.9 285.0 The following table presents a summary of the net present values of future cash flows (in USD millions):Reserves ClassOffshore Before Tax PV10Onshore Before Tax PV10Total Before Tax PV10Offshore After Tax PV10Onshore After Tax PV10Total After Tax PV10 1P $3,456.3 $197.0 $3,653.3 $1,734.1 $135.0 $1,869.1 2P $5,272.2 $376.0 $5,648.2 $2,246.7 $251.0 $2,497.7 3P $6,543.7 $427.0 $6,970.7 $2,383.4 $285.0 $2,668.4 Note: Reserve figures are shown as net working interest before royalties (Thailand royalty regime is discussed in the MD&A of the Company's Annual Report dated December 31, 2011). After-tax NPV figures are defined as future net revenues discounted at 10%. Reserve numbers taken from the Company's competent person's report prepared by RPS Energy Ltd. dated as of July 31, 2012 (prepared in accordance with NI 51-101 and the COGE Handbook) which may be found on the Company's website at Onshore reserve and resource numbers reflect Coastal's increased interest in APICO, which became effective January 1, 2012.OffshoreBua Ban North 1P reserves increased by 29% to 72 mmbbl and 2P reserves increased by 60% to 108.3 mmbbl. The increase in reserves was driven by a substantial increase in the stock tank oil originally in place (STOOIP) figure following analysis of core samples from Bua Ban North. The core analyses indicate that the level of water saturation in the field is approximately 25%; lower than the 40% level which was being used to calculate the original STOOIP volumes. The STOOIP number also increased due to the additional appraisal and development drilling which was performed on the field in the first quarter (Bua Ban North B-12 & B-13).Bua Ban South The Company booked 2.6 mmbbl of 1P reserves and 5.3 mmbbl of 2P reserves following the exploration & appraisal program at Bua Ban South. A further 14.7 mmbbl was placed in the Possible reserves category, bringing the 3P reserves to 20.0 mmbbl. The Company expects that it will be able to re-categorize much of the Possible reserves into 1P and 2P once production testing is performed. Songkhla A & Bua Ban Main 2P reserves at Songkhla A and Bua Ban Main increased by 18% and 20% respectively as reservoir performance in 2012 has been better than modeled.OnshoreDong Mun Following the successful test of the Dong Mun sidetrack well (Coastal 39% working interest) in the first quarter, the Company has recorded 59.7 bcf (10.0 mmboe of high quality contingent resources. This will be reclassified into 1P and 2P reserves once a gas sales agreement is secured. The Company and its partners in the onshore assets are currently working on the development plans for the field as well as securing a sales agreement and evaluating pipeline construction.Operations Update Two horizontal development wells and two water injection wells were drilled at Bua Ban North. The two horizontal wells are producing approximately 1,800 bopd each. Current offshore production is 22,500 bopd, with total company production averaging 24,500 boepd.      The lack of aquifer support on the western side of the field had caused the Company to shut in production from three of the existing wells (Bua Ban North A-01, A-03 and A-11). Now that water injection has been established, the Company will begin producing from these three wells again once pressure rebuilds (expected to be in approximately 30 days).  The rig is currently undergoing regulatory inspections and will spud the Songkhla J Buried Hill prospect following completion, which is expected next week. The Company has purchased the production facilities at Bua Ban North A, which will reduce its lease operating costs going forward as well as provide tax advantages. This brings the number of owned MOPUs to three. Randy Bartley, President and CEO of Coastal Energy, commented: "We are extremely pleased with the results of the interim reserves evaluation by RPS. Bua Ban North continues to surprise to the upside. The core analysis gave us a lot of valuable information about the reservoir and helped us to better formulate our field wide development plan. We are looking to contract a second rig so we can execute the Bua Ban North development while continuing our exploration program and expansion into Malaysia.  "Drilling the much needed water injectors will help to bring production from Bua Ban North back up to higher levels. We are already seeing increased rates from the Bua Ban North A-08 well due to the pressure reinjection. We expect to see benefits at the remaining wells on the western flank in the coming month as the water injection brings pressures up throughout the western side of the reservoir and we begin producing from the remaining three producers on that side.  "The Songkhla J exploration prospect is a pre-Tertiary objective approximately 2.5 kilometers north of the discovery well at Songkhla H. The well is expected to spud later this week and will be drilled to a depth of 6,700 feet. We have also commenced the planned 3D seismic acquisition over Block G5/43." 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.comor may be found in documents filed on SEDAR at The Coastal Energy Company logo is available at 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. Glossary of Technical Terms & Definitions The following defined terms have the respective meanings set out below:1P Proved reserves.2P Proved reserves + probable reserves.3P Proved reserves + probable reserves + possible reservesDevelopment well A well drilled within the proved area of an oil or gas reservoir to the depth of a stratigraphic horizon known to be productive.Exploratory well A well drilled to find a new field or to find a new reservoir in a field previously found to be productive of oil or gas in another reservoir.Proved reserves Those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.Probable reserves Those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved + probable reserves.Possible reserves Those additional reserves that are less certain to be recovered than probable reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved + probable + possible reserves.Reserves The estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on the analysis of drilling, geological, geophysical, and engineering data; the use of established technology; and specified economic conditions, which are generally accepted as being reasonable. Reserves are further classified according to the level of certainty associated with the estimates and may be subclassified based on development and production status. Royalties A payment to the government or others, usually expressed as a percentage of total hydrocarbon production.CONTACT: Enquiries: Coastal Energy Company Email: +1 (713) 877-6793 Strand Hanson Limited (Nominated Adviser) Rory Murphy Paul Cocker +44 (0) 20 7409 3494 Macquarie Capital (Europe) Limited (Broker) Paul Connolly Jeffrey Auld +44 (0) 20 3037 2000 FirstEnergy Capital LLP (Broker) Hugh Sanderson Travis Inlow +44 (0) 20 7448 0200 Buchanan (Financial PR) Tim Thompson Ben Romney Helen Chan +44 (0) 20 7466 5000