Coastal Energy Signs Letter of Intent with Deep Drilling 7 Pte. Ltd.

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Coastal Energy Company ("the Company") (TSX VENTURE:CEN)(AIM:CEO), an independent exploration and production company with assets in Southeast Asia, announced today that its wholly owned subsidiary, NuCoastal (Thailand) Limited, has signed a Letter of Intent ("LOI") with Deep Drilling 7 Pte. Ltd. for a three-month charter of the newbuild jackup rig "Deep Driller 7".

The rig, a Baker Marine Pacific Class 375, is currently undergoing acceptance testing at the PPL Shipyard in Singapore and is expected to commence operations in the Company's Songkhla field in the Gulf of Thailand by late September 2008. The LOI allows for an extension of up to an additional three months.

Drilling capital expenditures are expected to be approximately $9 million higher over the three month period utilizing the Deep Driller 7 rather than the originally contracted jackup. Management believes that the incremental costs will be largely offset by increased efficiency gains.

Randy Bartley, Chief Executive Officer of Coastal Energy commented: "We are excited to finalize this agreement. The Deep Driller 7 will help the Company achieve its goal of first production at Songkhla by year end."

The Company has retained the option to utilize the previously contracted rig, if appropriate, pursuant to the amended drilling contract.

Notes to Editors

- Coastal Energy is an oil and gas exploration, development and production company, with core assets onshore and offshore Thailand

- The Company specialises in identifying and developing under-exploited or "orphaned" or assets. Management has proven experience at identifying and unlocking value from overlooked, abandoned, low risk assets with proven hydrocarbon potential

- This strategy has enabled the Company to assemble an asset base in Thailand that includes production of approximately 11.5 mmcf/d of gas under long term contract and offshore oil fields currently under development

- Production growth over the next 12 -18 months is expected to grow exponentially and proven, probable and possible reserves are 45.5 million barrels oil equivalents(i)

- The Company's current assets include:

- Offshore Thailand

-- 100% of block G5/43 - two oil fields currently under development with several other appraisal and exploration opportunities. Production is expected to commence Q4 2008

-- 100% of block G5/50 - within the boundaries of block G5/43 in the Ko Kra basin

- Onshore Thailand

-- 12.6% net interest in blocks EU1 and E5N which include the Phu Horm gas field, which was producing in excess of 100 mmcf/d at the end of the first quarter 2008.

-- 36.1% net interest in block L15/43 surrounding the Phu Horm field

-- 36.1% net interest in block L27/43 - containing the undeveloped Dong Mun gas field

-- 21.7% net interest in block L13/48 located adjacent to blocks L15/43 and L27/43, contains Si That discovery

Additional information, including the Company's complete competent person's may be found on the Company's website, www.CoastalEnergy.com or may be found in documents filed on SEDAR, 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 eb 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.

(i) Per barrel of oil equivalent ("boe") amounts have been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil equivalent (6:1). The term boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6mcf: 1bbl of oil is based upon an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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.

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