Coastal Eng Regulatory News (CEO)

For immediate release                                                                                                                                   5 January 2012

TSX: CEN                                                                                                                                              

AIM: CEO

Coastal Energy Announces Initial Production Testing Results of Bua Ban North A Wells, Drilling Results at Bua Ban North B & Operations Update

Coastal Energy Company (the "Company" or "Coastal Energy") (TSX: CEN, AIM: CEO), an independent exploration and production company with assets in Thailand, announces the successful production testing results from the first two Bua Ban North A wells and the results of the Bua Ban North B-10 and B-12.

Offshore

The first Bua Ban North A wells have been completed and are undergoing production testing.  The Bua Ban North A-10 well, which is the first horizontal development well in the field, came fully online on December 28 and has been steadily producing approximately 3,000 bopd.  The Bua Ban North A-06 well has been completed and is producing approximately 1,000 bopd.  The Company expects to have the remaining eight Bua Ban North A wells online by the middle of February. 

The Bua Ban North B-10 well was drilled as a step-out well into a previously untested central graben fault block.  The well was drilled to a depth of 5,000 feet TVD and encountered 90 feet of net pay in the Miocene reservoir with 27% average porosity.  The well encountered oil in both the M100 and M500 sands.

The Bua Ban North B-12 well was drilled as an appraisal well on the western flank of the northern structure of the Bua Ban North field.  The well was drilled to a depth of 4,000 feet TVD and encountered 75 feet of net pay in the primary M100 Miocene sand with 26 percent average porosity.  An additional 5 feet of net pay was encountered in a shallow zone in the Middle Miocene. 

The Company has extended its crude oil sales agreement for an additional two years and has secured a discount of $1.70 per bbl to the Dubai benchmark crude price, which is at a premium to the previous discount to Dubai of $4.25 per bbl.

Onshore

APICO, the operator of the L27/43 concession onshore Thailand (Coastal net 36.1% working interest), has begun a sidetrack operation on the previously drilled Dong Mun 3 well.  The Dong Mun 3 well encountered gas shows in 2008; however, it was not tested due to lack of suitable testing equipment.  The decision to sidetrack is based upon newly obtained 3D seismic data, the interpretation of which indicates potential areas of higher porosity and permeability.  APICO is also evaluating the drilling of an additional well to test a large structure on the eastern side of L27/43.  The drilling of this well is contingent upon the results of the immediate offset well test on the adjacent L16/50 concession.  Test results are expected in the coming weeks.

Randy Bartley, President and CEO of Coastal Energy, commented:

"The recent results from both drilling and production testing have exceeded our expectations.  The B-10 well has confirmed that the M100 and M500 sands extend into the previously untested central area of the field while the B-12 well encountered thicker than expected sands on the highest structural position drilled thus far in the northern part of the field.  We are excited to find Middle Miocene pay for the first time.  This, along with the M75 zone discovered with the B-09 well, provide additional targets for future exploration within the field area.

"We are pleased with the initial testing results from our first horizontal well and we are currently planning two additional horizontal development wells at Bua Ban North B based on these successful results.  Following the completion of the three most recent wells and the additional drilling at Bua Ban North, the rig will be moved to Bua Ban South to begin exploration of this highly prospective asset."

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 Certified Petroleum Geologist and a Licensed Professional Geoscientist 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 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.

Enquiries:

Coastal Energy Company

Email: investor@CoastalEnergy.com                                                                                                                                                       +1 (713) 877-6793

Strand Hanson Limited (Nominated Adviser)                                                                                                                                  +44 (0) 20 7409 3494

Rory Murphy                                          

Paul Cocker                                            

Macquarie Capital (Europe) Limited (Broker)                                                                                                                                +44 (0) 20 3037 2000

Paul Connolly

Jeffrey Auld

FirstEnergy Capital LLP(Broker)

Hugh Sanderson                                                                                                                                                                                   +44 (0) 20 7448 0200

Travis Inlow

Buchanan             

Tim Thompson                                                                                                                                                                                       +44 (0) 20 7466 5000

Ben Romney

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.