Corporate Presentation September PDF Free Download

Forward Looking Statements This 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 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. This presentation does not contain all of the information contained in the preliminary prospectus of Coastal Energy Company, which should reviewed for complete information. 2

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: Sinphuhorm Gas 2,000 boe/d 1P 23.2 mmboe 2P 55.0 mmboe 3P 70.5 mmboe Contingent & Prospective Resources 668 mmboe Offshore Oil 11,500 bbl/d Total Production: 13,500 boepd Reserves Note: Reserve numbers are net working interest before royalties from the Competent Person s Report dated 12/31/2009 prepared by Huddleston & Co. 3

Investment Highlights Currently producing from both Onshore and Offshore Thailand Total production is approximately 13,500 boe/d Offshore Oil: 11,500 bbl/d Onshore Gas: 2,000 boe/d Established Production Base Cost Efficient Operations 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 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 Potential High impact Assets Active Drilling & Development Program Active development drilling program First phase of Bua Ban development is nearing completion Further development at Songkhla is planned for Q410 4

Offshore Thailand Onshore Thailand Block G5/43 (100%) Block G5/50 (100%) E5N & EU1 (12.6%) Block L15/43 (36.1%) Block L27/43 (36.1%) Block L13/48 (21.7%) 32.9 mmbl of 2P Reserves 11,500 bopd avg. production Two fields currently producing Songkhla & Bua Ban Total offshore production is approximately 11,500 bopd Bua Ban Field: Current phase of development drilling is nearing completion Songkhla Field: Further development drilling planned for Q410 22.1 mmboe of 2P Reserves 2,000 boe/d avg. production 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 Exploration in area north of Bua Ban expected to commence later this year Note: Reserve numbers from Competent Person s Report dated 12/31/2009 prepared by Huddleston & Co. 5

Offshore Development Plan 2 0 1 0 2 0 1 1 Sep Oct Nov Dec Jan Feb Mar B L O C K G 5 / 4 3 Songkhla A Benjarong Bua Ban Drill 2 Development & 1 Injection well Drill Oligocene Wedge Wells Stimulation Testing Bua Ban North Exploration Wells Legend In Progress Planned 7

Block G5/43: Fields and Prospects Songkhla 4 wells producing approximately 7,500 bopd Reserve and production upside potential in the Songkhla Wedge and Eocene Field 2P reserves of 11.1 mmbbl Bua Ban 7 wells producing approximately 4,000 bopd A-03 Micoene well is under evaluation along with A-04 and A-07 Eocene wells Field 2P reserves of 21.8 mmbbl 5 prospects surrounding Bua Ban Benjarong Eocene & East 1 Flow test rate was uncommercial; potential fracture stimulation of the Eocene and acid stimulation of the Oligocene limestone Existing 3-D coverage over discovered fields and several undrilled mapped prospects 8

Block G5/43: Bua Ban Field A-01, A-02, A-03, A-04, A-05, A-06 and A-10 are online and producing approximately 4,000 bopd Bua Ban A-10 encountered 130 feet of net pay in the Lower Oligocene reservoir at 17% porosity A-10 was drilled into the same fault block as A-05 Going forward, the A-08 is a northwest test of sands along the main glide plane fault, the A-09 is a potential injector down structure but will also test the potential of a large strat trap and could become a produce, and the A-11 is a Miocene test of an upthrown block southeast of the A-03 9

Block G5/43: Bua Ban Field Bua Ban Mid-Miocene -3400 ft sand (tvd) Amplitude Map 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 Strongest amplitude closing within closing contour contour results in ~ 1600-2000 3600 acres 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 Mid Miocene Sand Penetration Shows or tested oil 10

Block G5/43: Songkhla A Structure Map Top Oligocene Reservoir Songkhla Oligocene (Main) Songkhla Oligocene Wedge Songkhla Eocene Limit of Oligocene Sand Four 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 Process capacity to be upgraded to increase total fluid handling capacity and increase oil production 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 (Q4 10) The Songkhla Eocene Fault Block B is included in 3P reserves 11

Block G5/43: Songkhla A Seismic Line W Line 853 E Oligocene Main Oligocene Wedge Oligocene Sand Eocene 12

Songkhla Field Structural Cross Section S-A07 Oligocene Erosional Wedge N< S-1 S-A01 S-A03 S-A04 S-A08 >S Lower Oligocene Eocene Lowest Known Oil, -7526 13

Benjarong Structure Map Top Eocene Reservoir Benjarong 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 14

Total Production Growth Quarterly Production (BOE / D) 12,000 10,000 8,000 6,000 4,000 2,000 0 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Onshore Offshore 16

Improving Offshore Operating Netbacks $80.00 Offshore Netbacks ($ / bbl) $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $1.50 $11.16 $15.98 $2.38 $14.63 $19.12 $3.85 $3.35 $16.96 $29.41 $29.55 $23.77 $4.64 $22.19 $39.42 $5.12 $14.21 $50.08 $5.45 $14.67 $52.68 $0.00 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Cash Operating Netback Production expense Royalties Cash Taxes 17

Increasing EBITDAX 40,000 35,000 30,000 25,000 US $000s 20,000 15,000 10,000 5,000 - (5,000) 35,496 14,967 12,520 6,820 1,680 3,557 (264) 29,854 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 '10 (1) Note (1): EBITDAX in Q2 10 is lower than in Q1 10 due to the timing of liftings. The Company had approximately 222,000 bbls of crude oil inventory at the end of Q2 10. 18

2010 Estimates Metric 2010E Company Estimates Production (boe/d) 12,000 Cash Flow from Operations OCFPS fully diluted Capex* US$160MM C$1.50 US$145MM *Capex estimate revised to reflect rig contract extension announced August 16, 2010 Equity Research Estimates NAV (2P) Price Target CEN Stock Price (9/13/10) C$7.14 C$7.25 C$4.49 Discount to Target Price (38%) *Average of most recent analyst estimates from Canaccord Capital, Macquarie Capital, Royal Bank of Canada Capital Markets, Thomas Weisel Partners and GMP Europe 19

Significant Discount to 2P Net Asset Value Case 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$3.15 Proved +Probable $1,454.9 $577.1 $12.83 $5.09 C$5.28 Proved + Probable + Possible $2,134.6 $737.1 $18.83 $6.50 C$6.74 Onshore Proved $154.6 $107.3 $1.36 $0.95 C$0.99 Proved +Probable $299.2 $203.5 $2.64 $1.80 C$1.87 Proved + Probable + Possible $299.2 $203.5 $2.64 $1.80 C$1.87 Total Proved $763.9 $452.6 $6.73 $3.99 C$4.13 Proved + Probable $1,754.1 $780.6 $15.47 $6.89 C$7.14 Proved + Probable + Possible $2,433.9 $940.6 $21.47 $8.30 C$8.60 Market Price as of September 13, 2010(C$) Premium/(Discount) to 1P Value (Post- Tax) Premium/(Discount) to 2P Value (Post-Tax) C$4.49 9% (37)% Notes: All amounts in US dollars except where noted After-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 June 30, 2010 1 CAD = 0.965 USD as of September 13, 2010 20

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 70.5 Note: Gross Reserves taken from the Competent Person s Report prepared by Huddleston & Co., effective December 31, 2009 21

Offshore Reserves & Resources Reserves (mmbbl) 1P 2P 3P Songkhla Lower Oligocene 7.8 9.8 15.0 Songkhla Eocene 0.2 1.3 5.6 Bua Ban Main 7.2 21.8 27.8 Total 15.2 32.9 48.4 Prospective Resources* Songkhla North High Case (mmboe) 4.1 Songkhla West Oligocene Unit 2 8.8 Songkhla West Oligocene Unit 4 8.3 Songkhla South-West 2.6 Songkhla B Oligocene 2.6 Songkhla South 2.7 Songkhla Total 29.1 Bua Ban North A 11.1 Bua Ban North B 89.0 Bua Ban North C 44.1 Bua Ban North D 23.1 Benjarong Lower Oligocene 144.4 Bua Ban Total 311.7 G5/43 Total Prospective Resources 340.8 Contingent Resources* Benjarong High Case (mmboe) 17.5 Songkhla South-West 3.6 G5/43 Total Contingent Resources 21.1 Grand Total Offshore Prospective & Contingent Resources 361.9 Additional Coastal Prospects** High Case (mmboe) Songkhla A Miocene 23.7 Songkhla Total 23.7 Bua Ban Northeast A 23.4 Bua Ban Northeast B 10.2 Benjarong 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 22

Corporate Information Total number of shares outstanding Fully diluted share count Cash (as of 6/30/2010) Reserve Based Credit Facility Outstanding (as of 6/30/10) Other Short Term Debt (as of 6/30/10) Trading Symbols: CEN on TSX-V and CEO on London AIM 109,514,439 112,633,874 US$7.7 million US$28.6 million US$3.4 million 23

Onshore Blocks EU1, E5N, L15/43 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 Proposed Phu Horm South Well PK-1 Indosinian 1 Unconformity TWT Structure 25

Bua Ban Mid-Miocene -3400 ft sand (tvd) Time Structure Map Bua Ban Miocene 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 Closing contour results in ~ 3600 acres Proposed Phu Horm South Well PK-1 Mid-Miocene -3400 ft sand Mid Miocene Sand Penetration Shows or tested oil 26

Thailand Fiscal Terms G5/43 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; monthly production 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, Special Remuneratory 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 *Assumes $115MM capex for development of Bua Ban and Benjarong; $70/bbl realized; Average daily offshore production of 10K bopd in 2010 27

Special Remuneratory Benefit Designed as a Windfall Profits Tax for high oil price environments Assessed on a sliding scale basis determined by Revenue per Meter Drilled Petroleum Revenue applied to sliding scale is adjusted for inflation and exchange rate fluctuations (0 75%) Coastal s offshore concessions provide a 600,000 meter allowance to be added to actual drilling footage Tax assessed on Petroleum Profit Allowable deductions: Royalty, Capital Expenditures, Operating Expenses, Loss Carryforward All Capex is expensed as incurred, with a special 35% uplift on facilities capex Allows for full capital recovery plus uplift SRB is deductible for PIT purposes 28

Special Remuneratory Benefit Example Revenue: $250MM Adjusted Revenue: $200MM Deductible Expenses - $345MM Royalty (10%): $25MM Operating Expenses: $50MM Capital Expenditures: $120MM ($80MM intangible, $30MM facilities +35% facilities uplift) Loss Carryforward: $150MM Petroleum Profit: -$95MM ($250MM - $345MM), $95MM loss carried to next year Adjusted Revenue per Meter Drilled $200MM / (600,000 + 15 wells X 3,000 meters) = $310 per meter Resulting 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 29

Legal Disclaimer The information contained in this presentation ( Presentation ) has been prepared by Coastal Energy Company ( Company ) and is being delivered for informational purposes only to a limited number 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 in it 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 the information 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, any representations 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 written or 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 for any 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 any additional 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 written consent 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 the request 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 this Presentation 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 satisfy itself 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 with any 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 or expenses 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, or the 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 to such 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 should be 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 been approved 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 persons to 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 and Markets 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 which this 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 persons of 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 the FSA 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 prospectus to 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 may not 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 limited number 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 transmitted into 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. Any failure 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 relevant jurisdiction. 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. 30

Corporate Presentation September 2010