Corporate Presentation - Coastal Energy€¦ · 25 Legal Disclaimer

© Coastal Energy Company 2010 | All Rights Reserved Corporate Presentation January 2011

Corporate PresentationJanuary 2011

2Copyright Coastal Energy Company 2011 | All Rights ReservedCorporate Presentation January 2011

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 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.


� Two fields currently producing

� Songkhla Field: Successful appraisal and exploration has added over 40 mmbbl of oil in place in the Oligocene Wedge and an additional 40 mmbbl of oil in place in the Eocene

� Bua Ban Field: First phase of development drilling is complete; producing approximately 3,000 bopd

� Exploration program targeting over 150 mmbbl of prospective resources in the 1H2011

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 underway over the Sinphuhorm field

Block G5/43(100%)

Block G5/50(100%)

E5N & EU1(13%)

L27/43(36%)

L15/43(36%)

L13/48(22%)

� 32.9 mmbl of 2P Reserves

� 10,500 bopd avg. production

� $5.23 per share post-tax 2P NAV

� 22.1 mmboe of 2P Reserves

� 2,000 boe/d avg. production

� $1.84 per share post-tax 2P NAV

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


Key Highlights

Growing Oil Focused Production Profile �Established production base of 12,500 boepd which is 85% offshore oil and 15% onshore natural gas (natural gas pricing is based on oil products)

Significant Acreage and Drilling Inventory with substantial upside potential

� High impact exploration drilling in 2011 testing over 150 mmbbl of prospective resources

� 1.4 million acres in the Gulf of Thailand and over 30 identified prospects (1 million acres is contiguous in the southern area of the block and the remaining 400,000 is contiguous in the northern area)

Cost-effective Shallow Water Development

�Use of mobile platforms and FSOs lowers operating costs and F&D costs

Strong Management and Shareholder Support

� 70% of outstanding shares owned by management and top 4 shareholders

Investment Highlights


Drilling Program Average Daily Production

2010 Highlights

�First phase of Bua Ban field development is complete

�Successful exploration and appraisal drilling of the Lower Oligocene Wedge and Eocene reservoirs at Songkhla

2011 Highlights

�Exploration drilling targeting over 150 mmbbl of prospective resources in the first half of the year

�Planned fracture stimulation at Benjarong and Bua Ban

�Exploration at Bua Ban North beginning in early February

�2011 capex program of $150MM: 50% development drilling and 50% exploration drilling

Growing Production Profile

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Q3 09 Q4 09 Q1 10 Q2 10 Q3 10

Quarterly Production (BOE / D)

Offshore Onshore

118% growth in past 12 months


2011 After-Tax Cash Flow Sensitivity (net of $150MM Capex)

$150MM Capex budget is 50% exploration & 50% development

80.0

90.0

100.0

110.0

120.0

130.0

140.0

150.0

160.0

$70.00 $75.00 $80.00 $85.00 $90.00

Coastal Energy Cash Flow ($MM)

Realized Crude Oil Price ($/bbl)

13,000 bbl/d 14,000 bbl/d 15,000 bbl/d 16,000 bbl/d 17,000 bbl/d


Offshore Thailand: High Impact Potential


� Between now and June 2011 we will test prospects with unrisked prospective recoverable resources of 150 mmbbl:

� Bua Ban Eocene (50 mmbbl); fracture testing to begin January 2011

� Bua Ban North (Lower Oligocene 15 mmbbl, Miocene 15 mmbbl, Eocene 45 mmbbl); drilling of multiple exploration prospects scheduled to begin in January 2011

� Bua Ban South Miocene (35 mmbbl); scheduled to begin exploration/appraisal drilling in late Q1 2011; to the south of the two Bua Ban wells which have already encountered productive Miocene sands

Summary of Development Plan


Offshore Development Plan – 150 mmbbl of Prospective Resources

Bua Ban

B L O C K G 5 / 4 3

Benjarong

Legend

In Progress

Planned

Songkhla A

Drill up to 6 Bua Ban North A & B Exploration prospects (up to 75 mmbbl

potential recoverable)

Acid stimulation and frac of A-02 well (10 –20 mmbbl potential)

Fracture test of A-01 well (50

mmbbl potential)

Fracture test of A-04 Eocene (50 mmbbl potential for entire

play)

Test of Lacustrine shale at Bua Ban Main (50 –100 mmbbl potential)

Drill up 2 Miocene exploration and 6 Lower Oligocene

development wells at Bua Ban South (up to 35 mmbbl potential)

By June 2011 we will have tested

over 150 mmbbl of prospective

resources

2 0 1 1Feb Mar Apr May Jun Jul Aug

Conclude drilling of exploration

wells


� Songkhla

� Producing approximately 7,500 bopd

� Reserve and production upside has been confirmed with the successful exploration of Songkhla East Oligocene and Eocene

� Field 2P reserves of 11.1 mmbbl

� Bua Ban

� Producing approximately 3,000 bopd

� A-03 and A-11 Micoene wells under evaluation along with A-04 and A-07 Eocene wells

� Field 2P reserves of 21.8 mmbbl

� Exploration Upside

� Acid and fracture stimulations planned at Bua Ban and Benjarong to begin in late January

� Bua Ban Eocene (50 mmbbl potential)

� Bua Ban South Miocene (35 mmbbl potential)

� Bua Ban North Eocene, Miocene & Lower Oligocene (75 mmbbl aggregate potential)

� Unconventional Lacustrine Shale (50 – 100 mmbbl potential)


Songkhla A: Oligocene

Producer

Injector

SA-12ST

Well Interval Net Pay Porosity

A-09 Oligocene 140 feet 15%

Eocene 75 feet 16.5%


Eocene 69 feet 21%


Eocene 43 feet 19%

� Songkhla East drilling results confirm migration east of the Songkhla Wedge

� Further appraisal and exploration drilling will be required to determine aerial extent

� SA-07 sidetrack is currently being drilled

� An additional 5 development wells are currently planned

Songkhla Exploration Results

SA-07ST

12Copyright Coastal Energy Company 2011 | All Rights ReservedCorporate Presentation January 2011Top Eocene depth structure

52

13647

69

Net Pay (TVDFT) in Eocene

1000 m

Oil in Eocene

Eocene Development Proposed Location

80

Songkhla A: Eocene

� Songkhla Eocene mapping is still in progress

� The Eocene appears to be highly faulted

� Recent drilling results indicate a minimum 40 mmbbl in place in the Eocene

Well Interval Net Pay Porosity

A-07 Eocene 140 feet 17%



A-12 Eocene 0 feet N/A

A-12ST Eocene 47 feet 19%


Bua Ban North Basin Exploration ProspectsQ1 2011

Bua Ban North B 01

Bua Ban North A 01

Bua Ban Field

Bua Ban South

Bua Ban

Terrace C 01

Bua Ban

Miocene I 01

Prospect IntervalProspect

Depth (Feet)Unrisked STOOIP (MMBO) P50

Unrisked Recoverable (MMBO) P50

Bua Ban North A Oligocene/Eocene 8000 42 8

Bua Ban North B Oligocene/Eocene 7800 72 14

Bua Ban Terrace C Oligocene/Eocene 5800 139 28

Bua Ban Miocene IMiocene/Eocene

3500 20 8

Total 266 53


Significant Exploration Upside Potential in the Eocene Reservoir

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

4,0005,0006,0007,0008,0009,00010,00011,000

Av

era

ge

Po

rosi

ty (

Eo

ce

ne

Re

serv

oir

)

True Vertical Depth

Observed Projected

Benjarong A-02

Benjarong A-01

Benjarong A-01ST1

Bua Ban #1

Bua Ban A-07

Bua Ban A-04 Songkhla SW 1

Songkhla # 1Songkhla A-03

Songkhla South 1

Songkhla A-07

Terrace

Bua Ban North B

Bua Ban North A

Benjarong South

Songkhla A-09

Higher quality Eocene sands are expected on the northern exploration prospects planned for Q111 drilling

Porosity vs. Depth in Eocene Reservoir


Prospect Well Interval

Prospect Depth Unrisked (P50) Unrisked (P50)

(TVD Seismic ft) STOOIP (MMBO) Recoverable (MMBO)

Bua Ban Northeast Bua Ban North B-01 Oligocene 6200 17.026 3.405

Eocene 7800 39.854 3.985

Bua Ban G Miocene Miocene 3370 6.015 1.944

Bua Ban North D Oligocene Oligocene 6470 4.700 0.940

Total 67.595 10.274

Bua Ban Northwest Bua Ban Terrace C Oligocene Oligocene 5100 36.119 7.224

Eocene 5800 114.940 22.988

Bua Ban Terrace E Eocene Eocene 5550 38.999 7.800

Bua Ban H Miocene Miocene 3370 4.136 0.620

Bua Ban I Miocene Miocene 3340 13.069 1.960

Bua Ban M Miocene Miocene 2640 4.905 0.736

Total 212.168 41.328

Bua Ban North Central Bua Ban North A-01 Oligocene 7080 15.065 3.013

Eocene 7950 40.941 4.094

Bua Ban North E Oligocene Oligocene 5500 7.519 1.504

Bua Ban Terrace F Eocene Eocene 5700 57.051 11.410

Bua Ban D Miocene Miocene 3175 6.015 3.357

Bua Ban E Miocene Miocene 3370 5.478 1.987

Bua Ban F Miocene Miocene 3280 4.082 1.171

Total 136.151 26.536

Bua Ban South Bua Ban Terrace G Eocene Eocene 5775 32.905 6.581

Bua Ban Terrace H Eocene Eocene 7775 37.264 3.726

Bua Ban B Miocene Miocene 2630 2.126 13.406

Bua Ban C Miocene Miocene 2400 19.514 4.839

Bua Ban J Miocene Miocene 2660 4.368 1.848

Bua Ban K Miocene Miocene 2775 7.412 1.112

Bua Ban L Miocene Miocene 2640 3.473 0.521

Total 107.062 32.033

Total All Prospects 522.976 110.171

Prospective Resources P50 (“Base”) Case


Financial Information


Improving Offshore Operating Netbacks

$15.98 $19.12

$29.55 $23.77

$39.42

$50.08 $52.68

$44.58 $11.16

$14.63

$16.96 $29.41

$22.19

$14.21 $14.67

$15.99

$1.50

$2.38

$3.35

$3.85

$4.64$5.12

$5.45

$6.68

$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 Q3 10

Offshore Netbacks ($ / bbl)

Cash Taxes Royalties Production expense Cash Operating Netback


Increasing EBITDAX

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.

(1)

3,557

14,967

6,820

12,520

35,496

29,854

44,508

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

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

US $000s


Appendix


G5/43 South Exploration:

Bua Ban North A & B

Songkhla D ProspectW E

Tim

e (

sec)

1000 meters

Reprocessed PrSDM Time Domain

Top Lower Oligocene Lst

Base Lower Oligocene ReservoirTop Eocene

Songkhla E ProspectW E

Reprocessed PrSDM Time Domain

Bua Ban North C Prospect

Tim

e (

sec)

1000 meters

Top Lower Oligocene Lst

Base Lower Oligocene Reservoir

Top Eocene Base Lower Oligocene Sand

Time Structure

20 ms contour interval

1000 meters

Bua Ban North B

Bua Ban North A


Middle Miocene

Early Miocene

Oligocene

Reservoir

Source

Songkhla Stratigraphy

Seal

Reservoir

Eocene

Songkhla 1Benjarong 1

Reservoir


� “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

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 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

Special Remuneratory Benefit


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


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 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.

Corporate Presentation - Coastal Energy€¦ · 25 Legal Disclaimer

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