Corporate Presentation - Coastal Energy Prese… · This presentation contains ‘forward-looking statements’ as defined by the applicable securities legislation. Statements relating

© Coastal Energy Company 2010 | All Rights Reserved Corporate Presentation July 2010

Corporate PresentationAugust 2010

2Copyright Coastal Energy Company 2010 | All Rights ReservedCorporate Presentation August 2010

Forward Looking StatementsThis presentation contains ‘forward-looking statements’ as defined by the applicable securities legislation.Statements relating to current and future drilling results, existence and recoverability of potential hydrocarbonreserves, production amounts or revenues, forward capital expenditures, operation costs, oil and gas priceforecasts and similar matters are based on current data and information and should be viewed as forward-lookingstatements. Such statements are NOT guarantees of future results and are subject to risks and uncertaintiesbeyond Coastal Energy’s control. Actual results may differ substantially from the forward-looking statements. Thispresentation does not contain all of the information contained in the preliminary prospectus of Coastal EnergyCompany, which should reviewed for complete information.


Company Overview International Oil and Gas Company with assets in Thailand

Balanced portfolio of production, development and exploration assets:

– Offshore Thailand: Oil production with appraisal and exploration upside

– Onshore Thailand: Gas production with appraisal and exploration upside

Established Reserve and Production Base:

Note: Reserve numbers are net working interest before royalties from the Competent Person’s Report dated 12/31/2009 prepared by Huddleston & Co.

3P

70.5 mmboe

2P

55.0 mmboe

Contingent & Prospective Resources

668 mmboe

Total Production: 13,800 boepd Reserves

1P

23.2 mmboe

Sinphuhorm Gas 2,000 boe/d

Offshore Oil11,800 bbl/d


Investment Highlights

Established Production

Base

Active Drilling &

Development Program

Potential High impact

Assets

Cost Efficient Operations

Currently producing from both Onshore and Offshore Thailand

Total production is approximately 13,800 boe/d

– Offshore Oil: 11,800 bbl/d

– Onshore Gas: 2,000 boe/d

Offshore 2P Reserves of 32.9 mmbbl provide significant near term cash flow profile

Onshore 2P reserves of 22.2 mmboe provide long-term contracted cash flows

Prospective Resources of 325 mmbbl

Testing two exploration wells on Benjarong Eocene and East -1 prospects

Cost effective shallow-water development

– Songkhla & Bua Ban between 50 - 80 ft water depth

Ability to leverage existing offshore infrastructure in future development

– Use of FSO / processing platforms across multiple fields to minimize costs


Songkhla A Field: production is approx 8,000 bbl/d

Bua Ban Field: Drilling commenced late May, production is averaging approx 3,800 bopd

Untested exploration potential in Songkhla Basin and three other under-explored Tertiary Basins

– 4,000 sq. km 2-D seismic shoot on northern acreage is complete

Offshore Thailand Onshore Thailand

EU1 / E5N contains the Sinphuhorm Gas Field

– Currently producing 2,000 boepd

– Gas sold to Nam Phong power plant under a 15-year Gas Sales Agreement

A 3D seismic program is planned for the exploration acreage surrounding the Sinphuhorm field

Block G5/43(100%)

Block G5/50(100%)

E5N & EU1

(12.6%)

Block L27/43(36.1%)

Block L15/43(36.1%)

Block L13/48(21.7%)

32.9 mmbl of 2P Reserves11,800 bopd avg. production

22.1 mmboe of 2P Reserves2,000 boe/d avg. production

Note: Reserve numbers from Competent Person’s Report dated 12/31/2009 prepared by Huddleston & Co.


Offshore Thailand


Offshore Development Plan2 0 1 0

May Jun Jul Aug Sep Oct Nov Dec

Drill 10 Development & 2 Injection wells

Bua

Ban

B L

O C

K

G 5

/ 4

3B

enja

rong

Legend

In Progress

Planned

Test A-01 & A-02

Song

khla

A

Drill Oligocene Wedge Wells

Bua Ban North Exploration

Wells


Block G5/43: Fields and ProspectsSongkhla

4 wells producing approximately 8,000 bopd

Reserve and production upside potential in the Songkhla Wedge and Eocene

Field 2P reserves of 11.1 mmbbl

Bua Ban

5 wells producing approximately 3,800 bopd

A-03 Micoene well is under evaluation

Field 2P reserves of 21.8 mmbbl

5 prospects surrounding Bua Ban

Benjarong Eocene & East 1Flow test rate was uncommercial; potential fracture stimulation of the Eocene and acid stimulation of the Oligocene limestone section of the East 1 well

Existing 3-D coverage over discovered fields and several undrilled mapped prospects


Block G5/43: Bua Ban Field A-01, A-02, A-03, A-05 & A-06 are online and producing

approximately 3,800 bopd combined;

Bua Ban A-06 came online mid-August producing over

800 bopd from 40 feet of net pay with 17.5% porosity;

Bua Ban A-03 encountered the Miocene and is producing

80 bopd; prospectivity of the play is under evaluation

Bua Ban A-05 encountered 170 feet of total net pay in the

Upper and Lower Oligocene reservoirs with 15% porosity;

the 85 feet of net pay in the Lower Oligocene is higher

than the previous 68 feet of known thickness

The presence of the Upper Oligocene zone could open up

a new reservoir for development

A further 3 development wells and 2

exploration wells planned through end of

September

Bua Ban 3

Bua Ban 1

Bua Ban 2 Bua Ban A-01

Bua Ban A-02

Bua Ban A-03

Bua Ban A-04

Bua Ban A-05

Bua Ban A-06

Bua Ban A-07

Bua Ban A-08

Bua Ban 2A


Block G5/43: Bua Ban Field Bua Ban - Miocene Play

The Bua Ban A-03 well was drilled off structure and

encountered 20 feet of net pay in a Lower Oligocene

section 310 feet below the previous lowest known oil

The A-03 well also encountered 24 feet of net pay in the

Miocene reservoir at approximately 3,400 feet TVD

This is the first time that productive Miocene sands have

been encountered on Block G5/43

The Company is currently evaluating the prospectivity of

this new Miocene play

closing contour results in ~ 3600 acres

Strongest amplitude within closing contour results in ~ 1600-2000 acres

Bua Ban Mid-Miocene -3400 ft sand (tvd) Amplitude Map

Mid Miocene Sand Penetration

Shows or tested oil


Block G5/43: Songkhla AFour development wells have been drilled on the Lower Oligocene formation– All wells encountered oil in the Lower Oligocene primary

reservoir– Three water injection wells have been drilled– Strong water drive should increase ultimate recovery

The Songkhla A-08 well was drilled east of the original reservoir limit into the Songkhla Oligocene Wedge– Reserves of 3 mmbbl were assigned to the Wedge in 3P

numbers as of 12/31/2009– Well performance supports the existence of the Wedge

An exploration well (A-07) was drilled into the Eocene reservoir and encountered oil– Well was damaged during workover operations; plan to

redrill at time of development of Oligocene Wedge (Q1 11)– The Songkhla Eocene Fault Block B is included in 3P

reserves

Structure Map Top Oligocene Reservoir

Songkhla Oligocene(Main)

Songkhla Eocene

Songkhla Oligocene

Wedge

Limit of Oligocene Sand


Block G5/43: Songkhla A Seismic Line

Oligocene Sand

Oligocene WedgeOligocene

Main

Eocene

Line 853W E


Low

er O

ligoc

ene

Lowest Known Oil, -7526

N< S-1 S-A01 S-A03 S-A04 S-A08 >S

Oligocene Erosional Wedge

S-A07

Eoce

ne

Songkhla Field Structural Cross Section


BenjarongBenjarong Eocene A-01 well

– 83.5 feet of net pay with 12% porosity in Eocene

reservoir

– Additional 16.5 feet of net pay with 15% porosity

seen in a shallower section of the Eocene

Benjarong East 1

– 30 feet of net pay with 15% average porosity in the

Eocene

– Non conventional Lower Oligocene limestone

section encountered oil shows

Flow test rate was uncommercial; potential fracture

stimulation of the Eocene and acid stimulation of the

Oligocene limestone section of the East 1 well

Structure Map Top Eocene Reservoir


G5/50 Exploration Potential

Areas of Interest

G5 / 43 N

G5 / 50

Northern Block of G5/43 and G5/50

4,000 sq. km of 2-D seismic acquired in Q4 2009

– Seismic is currently being interpreted

– Three lead areas have already been identified

Exploration wells are planned for 1H 2011


Financial Information and Reserves


Total Production Growth

0

2,000

4,000

6,000

8,000

10,000

12,000

Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10

Qua

rter

ly P

rodu

ctio

n (B

OE

/ D)

Onshore Offshore


Improving Offshore Operating Netbacks

$15.98 $19.12$29.55

$23.77

$39.42$50.08 $52.68

$11.16$14.63

$16.96 $29.41

$22.19

$14.21$14.67

$3.35

$3.85

$4.64$5.12

$5.45

$2.38

$1.50

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10

Off

shor

e N

etba

cks

($ /

bbl)

Cash Operating Netback Production expense Royalties Cash Taxes


Increasing EBITDAX

29,85435,496

12,5206,820

14,967

3,557(264)1,680

(5,000)

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 '10

US

$000

s

(1)

Note (1): EBITDAX in Q2 ’10 is lower than in Q1 ’10 due to the timing of liftings. The Company had approximately222,000 bbls of crude oil inventory at the end of Q2 ’10.


2010 Estimates

Metric 2010E

Company Estimates

Production (boe/d) 12,000

Cash Flow from Operations US$160MM

OCFPS – fully diluted C$1.50

Capex* US$145MM

*Capex estimate revised to reflect rig contract extension announced August 16, 2010

Equity Research Estimates

NAV (2P) C$7.75

Price Target C$7.25

CEN Stock Price (8/17/10) C$4.95

Discount to Target Price (32%)*Average of most recent analyst estimates from Canaccord Capital, Macquarie Capital, Royal Bank of Canada Capital Markets , Thomas Weisel Partners and GMP Europe


Significant Discount to 2P Net Asset ValueCase 10% Pre-tax

(US$ MM)10% Post-Tax

(US$ MM)NAV per Share (US$ Pre-tax)

NAV per Share (US$ Post-tax)

NAV per Share (C$ Post-tax)

Offshore

Proved $609.3 $345.2 $5.37 $3.04 C$3.20

Proved +Probable $1,454.9 $577.1 $12.83 $5.09 C$5.35

Proved + Probable + Possible $2,134.6 $737.1 $18.83 $6.50 C$6.83

Onshore

Proved $154.6 $107.3 $1.36 $0.95 C$0.99

Proved +Probable $299.2 $203.5 $2.64 $1.80 C$1.89

Proved + Probable + Possible $299.2 $203.5 $2.64 $1.80 C$1.89

Total

Proved $763.9 $452.6 $6.73 $3.99 C$4.19

Proved + Probable $1,754.1 $780.6 $15.47 $6.89 C$7.23

Proved + Probable + Possible $2,433.9 $940.6 $21.47 $8.30 C$8.72

Market Price as of August 17, 2010(C$) Premium/(Discount) to 1P Value (Post-Tax)

Premium/(Discount) to 2P Value (Post-Tax)

C$4.95 8% (32)%

Notes: All amounts in US dollars except where notedAfter-tax NAVs include effect of Thai Petroleum Income Tax (PIT) and Special Remuneratory Benefit (SRB)NAVs determined using Forecast Pricing from Gilbert Lausten Jung (www.gljpc.com)Per share amounts calculated using fully diluted shares outstanding at March 31, 20101 CAD = 0.952 USD as of June 30, 2010


Total Reserve Base

License Area Proved (1P) Proved +Probable (2P) Proved + Probable + Possible (3P)

Offshore – Oil (mmbbl)

Songkhla Lower Oligocene 7.8 9.8 15.0

Songkhla Eocene 0.2 1.3 5.6

Bua Ban 7.2 21.8 27.8

Total Offshore (mmbbl) 15.2 32.9 48.4

Onshore

Sinphuhorm - Gas (bcf) 46.7 128.4 128.4

Sinphuhorm – Condensate (mmbbl) 0.3 0.7 0.7

Total Onshore (mmboe) 8.0 22.1 22.1

Grand Total (mmboe) 23.2 55.0 70.5Note: Gross Reserves taken from the Competent Person’s Report prepared by Huddleston & Co., effective December 31, 2009


Offshore Reserves & ResourcesReserves (mmbbl) 1P 2P 3PSongkhla Lower Oligocene 7.8 9.8 15.0Songkhla Eocene 0.2 1.3 5.6Bua Ban Main 7.2 21.8 27.8

Total 15.2 32.9 48.4

Prospective Resources*Songkhla North 4.1Songkhla West Oligocene Unit 2 8.8Songkhla West Oligocene Unit 4 8.3Songkhla South-West 2.6Songkhla B Oligocene 2.6Songkhla South 2.7

Songkhla Total 29.1

Bua Ban North A 11.1Bua Ban North B 89.0Bua Ban North C 44.1Bua Ban North D 23.1Benjarong Lower Oligocene 144.4

Bua Ban Total 311.7G5/43 Total Prospective Resources 340.8

Contingent Resources*Benjarong 17.5Songkhla South-West 3.6

G5/43 Total Contingent Resources 21.1

Grand Total Offshore Prospective & Contingent Resources 361.9

Additional Coastal Prospects**Songkhla A Miocene 23.7

Songkhla Total 23.7

Bua Ban Northeast A 23.4Bua Ban Northeast B 10.2Benjarong East 1 & 2 21.9

Bua Ban Total 55.5

Songkhla B Oligocene (Contingent) 1.0

Total Coastal Additional Prospects 80.2

Gross Working Interest Reserves*Huddleston & Co. estimates as of 12/31/2009**Coastal Reserve Estimates Only

High Case (mmboe)

High Case (mmboe)

High Case (mmboe)


109,066,282113,365,135

US$10.2 millionUS$29.6 millionUS$3.5 million

Total number of shares outstandingFully diluted share countCash (as of 3/31/2010)Reserve Based Credit Facility Outstanding (as of 3/31/10)Other Short Term Debt (as of 3/31/10)Trading Symbols: “CEN” on TSX-V and “CEO” on London AIM

Corporate Information


Appendix


Sinphuhorm Gas Field

Coastal net 12.6% interest (Hess Operator)

Coastal net 2,000 boe/d

Feedstock for 750 MW power plant at Nam Phong;

gas sold under 15-year gas sales agreement

expiring 2021

Contingent gas resources of 5.4 tcf (high case)

3-D seismic shoot planned for 2010

Onshore Blocks EU1, E5N, L15/43

Indosinian 1 Unconformity TWT Structure

PK-1

Proposed Phu Horm South Well


Bua Ban Mid-Miocene -3400 ft sand (tvd)Time Structure Map

Bua Ban Miocene

PK-1

Proposed Phu Horm South Well

Closing contour results in ~ 3600 acres

Mid-Miocene -3400 ft sand

Mid Miocene Sand Penetration

Shows or tested oil

Miocene shows in the Bua Ban A-03 well could open up a

new play in the basin

Oil tested from the Miocene formation in the A-03 was

sweet and had API gravity of 34 degrees

The Company is evaluating go forward plans for future

appraisal of the Miocene


“Thai III” regime

Royalty payable on a sliding scale determined by monthly production volume (5 – 15%)

Current monthly production volume results in 7% effective royalty rate; monthlyproduction of 20,000 bopd results in 10% effective royalty rate

Petroleum Income Tax (“PIT”) payable on net income after deductions

Allowable deductions: Royalty, Operating Expenses, Depreciation Allowance, SpecialRemuneratory Benefit, Loss Carryforward

Tangibles depreciated straight-line over 5 years

Pre-production intangibles depreciated straight-line over 10 years

Post-production intangibles expensed as incurred

Resulting net income taxed at 50% rate

Coastal expects its overall effective tax rate to be approximately 5 - 10% in 2010*

Coastal does not expect to incur any SRB liability in 2010

Thailand Fiscal Terms – G5/43

*Assumes $115MM capex for development of Bua Ban and Benjarong; $70/bbl realized; Average daily offshore production of 10K bopd in 2010


Designed as a “Windfall Profits Tax” for high oil price environmentsAssessed on a sliding scale basis determined by “Revenue per Meter Drilled”

Petroleum Revenue applied to sliding scale is adjusted for inflation and exchange ratefluctuations (0 – 75%)

Coastal’s offshore concessions provide a 600,000 meter “allowance” to be added to actualdrilling footageTax assessed on “Petroleum Profit”

Allowable deductions: Royalty, Capital Expenditures, Operating Expenses, LossCarryforwardAll Capex is expensed as incurred, with a special 35% “uplift” on facilities capexAllows for full capital recovery plus uplift

SRB is deductible for PIT purposes

Special Remuneratory Benefit


Special Remuneratory Benefit ExampleRevenue: $250MM

Adjusted Revenue: $200MMDeductible Expenses - $345MM

Royalty (10%): $25MMOperating Expenses: $50MMCapital Expenditures: $120MM ($80MM intangible, $30MM facilities +35% facilities uplift)Loss Carryforward: $150MM

Petroleum Profit: -$95MM ($250MM - $345MM), $95MM loss carried to next yearAdjusted Revenue per Meter Drilled

$200MM / (600,000 + 15 wells X 3,000 meters) = $310 per meterResulting SRB rate is approximately 25% per sliding scale (USD/THB rate of 35 was used);applied to negative Petroleum Profit results in no SRB payable

Adj. Revenue per Meter SRB Rate

<137 0

137 – 411 1% for each $7

411 – 960 1% for each $27

>960 1% for each $110


Legal DisclaimerThe information contained in this presentation (“Presentation”) has been prepared by Coastal Energy Company (“Company”) and is being delivered for informational purposes only to a limitednumber of persons to assist them in deciding whether or not they have an interest in investing in the Company. The Presentation has not been independently verified and the information contained init is subject to updating, completion, revision, verification and further amendment. The Presentation does not purport to contain all information that a prospective investor may require. While theinformation contained in it has been prepared in good faith, neither the Company nor its shareholders, directors, officers, agents, employees, or advisors give, has given or has authority to give, anyrepresentations or warranties (express or implied) as to, or in relation to, the accuracy, reliability or completeness of the information in this Presentation, or any revision thereof, or of any other writtenor oral information made or to be made available to any interested party or its advisers (all such information being referred to as “information”) and liability therefore is expressly disclaimed.Accordingly, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers take any responsibility for, or will accept any liability whether direct, express or implied,contractual, torturous, statutory or otherwise, in respect of the accuracy or completeness of the information or for any of the opinions contained in, or for any errors, omissions or misstatements or forany loss, howsoever arising from the use of this Presentation. In furnishing this Presentation, the Company does not undertake or agree to any obligation to provide the recipient with access to anyadditional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation which may become apparent.Information contained in this Presentation is confidential information and the property of the Company. It is made available strictly for the purposes referred to above.The Presentation and any further confidential information made available to any recipient must be held in complete confidence and documents containing such information may not be reproduced,used or disclosed without the prior written consent of the Company. This Presentation must not be copied, published, reproduced or distributed in whole or in part at any time without the prior writtenconsent of the Company and by accepting the delivery or making to it of this Presentation, the recipient agrees not to do so and to return any written copy of this Presentation to the Company at therequest of the Company.This Presentation should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisors. Each party to whom thisPresentation is delivered or made must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary. In particular,any estimates or projections or opinions contained in this Presentation necessarily involve significant elements of subjective judgement, analysis and assumption and each recipient should satisfyitself in relation to such matters. Neither the delivery or making of this Presentation nor any part of its contents is to be taken as any form of commitment on the part of the Company to proceed withany transaction and the right is reserved to terminate any discussions or negotiations with any prospective investors. In no circumstances will the Company be responsible for any costs, losses orexpenses incurred in connection with any appraisal or investigation of the Company.This Presentation does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to subscribe for or purchase any securities in the Company, nor shall it, orthe fact of its delivery, making or distribution, form the basis of, or be relied upon in connection with, or act as any inducement to enter into, an contract or commitment whatsoever with respect tosuch securities. Any such solicitation or offer will be made by means of a prospectus to be issued by the Company in due course and any decision to subscribe for securities in the Company shouldbe made solely on the basis of the information contained in such prospectus.

The delivery, making or distribution of this Presentation in or to persons in certain jurisdictions may be restricted by law and persons who receive this Presentation should inform themselves about,and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of the relevant jurisdiction. In particular, this Presentation has not beenapproved by an authorised person pursuant to Section 21 of the Financial Services and Markets Act 2000 (“FSMA”) and accordingly, it is being communicated in the United Kingdom only to personsto whom this Presentation may be communicated without contravening the financial promotion prohibition in Section 21 of the FSMA. Those persons are described in the Financial Services andMarkets Act 2000 (Financial Promotion) Order 2005 (“Order”) and include persons who fall within the category of person set out in Articles 19 and 49 of the Order. Any investment activity to whichthis Presentation relates in the United Kingdom is available to, and will only be engaged with such persons and this Presentation should not be acted or relied upon in the United Kingdom by personsof any other description. This Presentation has not been approved as a prospectus by the UK Financial Services Authority (“FSA”) under Section 87A of the FSMA and has not been filed with theFSA pursuant to the United Kingdom Prospectus Rules. No offer of securities in the Company is being or will be made in the United Kingdom in circumstances which would require such a prospectusto be prepared.The securities proposed to be issued by the Company (the "Common Shares") have not and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") and maynot be offered or sold in the United States except pursuant to an exemption from, or transactions not subject to, the registration requirements of the Securities Act. In addition, other than to a limitednumber of persons reasonably believed to be qualified institutional buyers (as defined in Rule 144A under the Securities Act), neither this Presentation nor any copy of it may be taken or transmittedinto the United States or America or distributed directly or indirectly, in the United States of America or to any resident thereof except in compliance with the applicable U.S. securities laws. Anyfailure to comply with these restrictions may constitute a violation of applicable U.S. securities laws.By accepting this Presentation, the recipient represents and warrants that it is a person to whom this Presentation may be delivered or distributed without a violation of the laws of any relevantjurisdiction. This Presentation is not to be disclosed to any other person or used for any other purpose and any other person who receives this Presentation should not rely or act upon it.

Documents

Corporate Presentation - Coastal Energy Prese… · This presentation contains ‘forward-looking statements’ as defined by the applicable securities legislation. Statements relating