INITIATION REPORT

August 26, 2011 Rating: BUY Target: C$16.50

COASTAL ENERGY COMPANY (CEN-TSX, CEO-AIM)

INTERMEDIATE E&P FOCUSED ON OFFSHORE THAILAND
COASTAL ENERGY COMPANY
(Currency is US$ unless noted otherwise)

TSX:CEN, AIM:CEO C$9.57 C$16.50 72.4% C$3.83 - C$11.00 246,974 115.2 1,102.1 1,237.9 118.1 4.7%

ON A ROLL
Coastal shares currently trade at 3.1x EV/EBITDAX (2012); our C$16.50 price target is based on 4.5x oneyear forward EBITDAX and is supported by a NAV of C$17.81 per share. Coastal is riding a wave of drilling success this year, achieving a 92% success rate and adding an estimated 70MM in recoverable resources from 11 different production zones. Coastal has identified more than 30 prospects equivalent to two years of drilling inventory. Production is expected to ramp up significantly as the company develops its recent discoveries; we forecast an average production CAGR of 43% from 2010-2013. Production averaged 9,670 boed in 2010.

Closing Price Target Price Potential Return 52 Week Low / High Average Daily Volume MARKET INFO Shares Outstanding (MM) Market Cap (C$MM) Enterprise Value ($MM) Net Total Debt ($MM) M&D Equity Holdings (basic) FY Ending: DEC 31 Reserves (2P, MM boe) Net Production (boed) % Natural Gas Dubai Price Operating Netback (boed) Revenue ($MM) Operating Cash Flow ($MM) EBITDAX ($MM) Capex ($MM) CFPS (FD) EPS (FD) VALUATION EV/EBITDAX P/CF EV/Reserves (2P, boe) EV/Production (boed) NAV 2010 2011E

2012E

2013E

45.7 9,670 12,967 22,838 28,050 21% 17% 11% 10% $78.11 $106.57 $98.75 $90.00 $45.07 $65.18 $56.70 $49.42 177.2 363.9 624.8 702.9 121.7 214.9 378.6 398.6 114.3 236.6 395.6 428.0 133.4 135.0 250.0 260.0 $1.08 $1.85 $3.21 $3.35 $0.14 $0.59 $1.12 $1.05 2010 2011E 2012E 2013E 10.8x 5.2x 3.1x 2.9x 9.2x 5.2x 3.0x 2.8x $27.09 $128,018 $95,466 $54,206 $44,133 C$17.81

INITIATING COVERAGE
We are initiating coverage of Coastal Energy (Coastal) with a BUY rating and one-year target price of C$16.50, implying a rate of return of 72%. Coastal has achieved significant exploration success since the start of year; as management further develops its understanding of the local geology on its considerable land package in the Gulf of Thailand, we expect the company to continue to deliver and expand upon its inventory of prospects. We expect funds generated from the current ramp up in production to facilitate that exploration process. Considering the attractive valuation, proven assets, significant production trajectory, expanding inventory of drilling prospects and an experienced management team, we recommend investors build a position in the name.

Source: M Partners, company reports, CapitalIQ.

COMPANY HIGHLIGHTS
Recent drilling success. Coastal has had a successful start to the year adding a management-estimated 70MM bbl of recoverable resources, the majority of which is the result of its exploration of the Miocene play in the Bua Ban North field. Yearto-date, Coastal has discovered 11 production zones through 12 exploration wells. Initial flow rates from the first four wells were above management expectations, producing a total of 7,100 boed or an average of 1,775 boed each. Production is trending higher. Production averaged 9,494 boed in Q2/11, 76% of which was offshore oil. Although regular workover requirements and instances of coning have weighed on production from the Songhkla field, we expect the companys production profile to improve as recent discoveries are brought online. We estimate production to average 28,050 boed in 2013, up from 9,670 boed in 2010. Significant inventory of prospects. Coastal has identified over 30 prospects representing two years of inventory on its 1.4MM acres in the relatively shallow Gulf of Thailand. The company is targeting over 100MM bbl of recoverable resources with its H2/11 drilling campaign. With the majority of prospects at a depth of only 3,000-4,000 feet, wells can be drilled and completed for an average of $2.5MM-$3MM.

Source: stockcharts.com COMPANY DESCRIPTION Coastal produces oil/natural gas from four fields in Thailand, including three located offshore. The majority of the companys 5,000 km2 (1.4MM acres) land holdings are located offshore. The companys production is heavily weighted toward oil; Coastals natural gas production comes from its 36% stake in APICO LLC. Net average production stood at 9,494 boed in Q2/11.

Member of the Investment Industry Regulatory Organization of Canada (IIROC) Participating Organization Toronto Stock Exchange and Toronto Venture Exchange Member Canadian Investor Protection Fund (CIPF)

David Buma 416.603.7381 ext. 240 db@mpartners.ca

COASTAL ENERGY COMPANY

August 26, 2011

Improving political environment. After five years of instability, the political climate in Thailand appears to have improved following the recent election. The new government has announced its intention to cut corporate taxes, in part to attract foreign direct investment to the country. Fully funded 2011 capex program. Coastal has budgeted $135MM in capex for 2011, approximately half of which is marked for exploration; with estimated operating cash flow of $215MM, the capex program appears well funded. The balance sheet is solid, with net long term debt of $75MM and a net total debt/cap ratio of 46% as of June 30, 2011. Management has extensive international experience, operating in both onshore and offshore oilproducing areas around the world including Southeast Asia. Of note, Mr. Lloyd Smith, appointed Chairman earlier this year, previously served as the UK ambassador to Thailand. Management and directors own 4.7% of Coastal shares outstanding. In addition, Oscar Wyatt Jr. owns 27MM shares, 19MM of which are subject to a voting trust agreement, giving outside directors voting control of an additional 17% of Coastal shares outstanding. Valuation at discount to comparables. Coastal shares currently trade at 3.1x EV/EBITDAX (2012) at a 23% discount to a sample of Southeast Asian and Australasian comparables. Our one-year target of C$16.50 is based on an EV/EBITDAX multiple of 4.5x. We estimate a NAV of C$17.81 per Coastal share.

VALUATION
Significant upside potential We rate shares of Coastal BUY with a one-year price target of C$16.50, implying a rate of return of 72%. Our target price is based on a 4.5x EV/EBITDAX multiple applied one year forward (Q3/12-Q2/13); with the company generating meaningful levels of EBITDAX and an estimated reserve life of 20 years, we believe this valuation method is appropriate for Coastal shares. We note our price target is supported by our C$17.81 net asset value (NAV) estimate.

Exhibit 1 - Southeast Asian and Australasian Oil & Gas Comparables as of August 25, 2011
Mkt (In US$ unless noted otherwise) Company Ticker Price Cap AWE Limited AWE-AU A$1.24 644.5 BNG-T C$1.05 54.6 Bengal Energy Niko Resources NKO-T C$53.31 2,795.3 C$3.12 176.9 Pan Orient Energy POE-V Premier Oil PMO-LN 3.16 2,373.0 Salamander Energy SMDR-LN 2.28 573.7 Stream Oil & Gas SKO-V C$0.90 58.6 TAG Oil TAO-T C$6.72 336.5 Average Coastal Energy CEN-T Netback / BOE $37.12 $21.34 $20.40 $58.70 $21.34 $40.50 $24.90 $43.34 $45.07 C$9.57 1,093.2 EV ($M) 593.2 41.4 3,114.9 120.2 3,040.4 798.7 58.8 268.2 1,238.2 RLI EV/Prod Avg Prod Per Day 2010 % Gas 2011E (2010) (2010) 16,682 50% 16,986 12.0 $35,558 101 58% 400 13.5 nm 49,000 94% 54,167 11.3 $63,570 3,884 0% 2,825 nm $30,940 42,500 63% 42,500 16.8 $71,538 20,300 32% 22,500 8.9 $39,343 364 3% 1,098 140.7 $161,452 438 0% 3,000 nm nm 33.9 $67,067 9,670 21% 12,967 P/CF 2011 5.5x nm 11.9x 3.5x 2.5x 1.4x 5.3x nm 5.0x 5.3x 12.9 $128,042 EV/Prod EV/ (2011) Reserves $34,922 $8.09 $103,414 nm $57,506 $15.48 $42,546 $3.77 $71,538 $11.66 $35,497 $12.05 $53,522 $3.14 $89,415 nm $61,045 $9.03 $95,484 $27.10

Company AWE Limited Bengal Energy Niko Resources Pan Orient Energy Premier Oil Salamander Energy Stream Oil & Gas TAG Oil Average Coastal Energy

EV/EBITDAX 2010 2011 2012 3.7x 4.8x 3.0x nm nm nm 10.0x 11.1x 11.0x 1.6x 1.8x nm 6.7x 4.5x 2.7x 5.0x 2.1x 2.1x nm 5.0x 1.0x nm nm nm 5.4x 4.9x 4.0x 10.8x 5.2x 3.1x

2010 4.7x nm 10.1x 2.8x 3.8x 2.7x nm nm 4.8x 9.0x

2012 4.0x nm 11.6x 2.3x 1.7x 1.2x 1.3x 5.8x 4.0x 3.0x

Operations Australia, Indonesia, Texas Australia, India India, Bangladesh, Indonesia, Trinidad Thailand, Indonesia North Sea, Pakistan, Vietnam, Indonesia Thailand, Indonesia, Vietnam, PNG Albania New Zealand Thailand

EV = market capitalization + net debt +/- working capital; EBITDAX = EBITDA before exploration expenses; RLI = 2P Reserves/Production

Source: CapitalIQ; company reports; M Partners estimates.

Member of the Investment Industry Regulatory Organization of Canada (IIROC) Participating Organization Toronto Stock Exchange and Toronto Venture Exchange Member Canadian Investor Protection Fund (CIPF)

David Buma 416.603.7381 ext. 240 db@mpartners.ca

COASTAL ENERGY COMPANY

August 26, 2011
We highlight the following valuation metrics at current price levels: EV/EBITDAX: Coastal shares currently trade at 5.2x (2011) and 3.1x (2012). By comparison, a sample of Southeast Asian and Australasian comparables trade at an average of 4.9x (2011) and 4.0x (2012) (Exhibit 1). On a debt-adjusted cash flow basis, Coastal shares currently trade at 5.5x (2011) and 3.2x (2012). EV/Production: Coastal is currently valued at $95,484/boed on our 2011 average production forecast but $54,216/boed on 2012 due to the significant ramp up in production. Of note, we forecast an average production rate CAGR of 42% from 2010-2013. Coastals comparables trade at $61,045/boed (2011). EV/Reserves: On an EV/Reserves (2P) basis, Coastal currently trades at $27.10/boe. However, with a significant portion of the 70MM in 2011 resource additions expected to be booked to 2P reserves at yearend, we would expect a more than doubling from the 45.7MM boe as of December 31, 2010. This would in turn bring the EV/Reserves valuation significantly closer to the $9.03/boe average of Coastals comparables. C$17.81 NAV implies significant upside We estimate a net asset value of C$17.81 per Coastal share. This is comprised of a 2P NAV of C$8.22 per share plus a risked NAV of C$9.69 per share, based on the resource potential per the 2010 reserves report and adjusted for the success experienced at both Bua Ban North and Songkhla H since that time. With continued exploration drilling success, we would expect the NAV to benefit as a result of the reduced risk profile in those areas. Further drilling should also serve to better define those resources and enable the company to convert its resources to proven and probable reserves. We provide a detailed NAV calculation in Exhibit 2. Coastal shares currently trade at 1.2x our 2P NAV and 0.5x our risked NAV.

Exhibit 2 - Coastal Net Asset Value NAV Approach (in US$) Current Proven/Probable Development Potential: (Possible & Potential Resources) Songkhla A - Eocene Songkhla A - Oligocene Songkhla H - Oligocene Songkhla - Other Bua Ban - Eocence Bua Ban - Miocene Bua Ban - Oligocene Bua Ban North Bua Ban - Other APICO Other Total Development Potential Total NPV Net Debt Proceeds From Options/Warrants NAV C$/US$ Exchange Rate NAV (C$) Assumptions: FD Shares Outstanding (MM) Long-Term Dubai (US$/bbl) Long-Term Natural Gas Price ($US/mcf) Long-Term Price Escalation 115.2 $87.50 $7.00 1.0% Total (MMboe) 98.0 Risk Adjusted Factor Total (MM) 100% 98.0 NPV10- NPV10-AT NPV10-AT AT/boe Total Per Share $11.04 1,082.1 $9.40

4.0 5.5 12.3 40.5 0.4 0.2 4.6 144.4 48.8 83.3 34.5 378.4

50% 50% 56% 20% 50% 50% 50% 59% 20% 30% 25% 40%

2.0 2.8 6.8 8.1 0.2 0.1 2.3 85.5 9.8 25.0 8.6 151.1

$7.94 $7.94 $9.54 $3.18 $7.67 $7.67 $7.67 $10.36 $3.07 $2.14 $3.12

16.1 21.8 64.9 25.7 1.5 0.7 17.7 885.4 29.9 53.4 26.9 1,144.1 2,226.2 (118.1) 11.1 2,119.2 $0.97 2,050.8

$0.14 $0.19 $0.56 $0.22 $0.01 $0.01 $0.15 $7.69 $0.26 $0.46 $0.23 $9.93 $19.33 ($1.03) $0.10 $18.40 $17.81

Source: Company reports; M Partners estimates.

Member of the Investment Industry Regulatory Organization of Canada (IIROC) Participating Organization Toronto Stock Exchange and Toronto Venture Exchange Member Canadian Investor Protection Fund (CIPF)

David Buma 416.603.7381 ext. 240 db@mpartners.ca

COASTAL ENERGY COMPANY

August 26, 2011

CATALYSTS
Key catalysts include further flow tests, drilling at Bua Ban Potential catalysts for the shares include the following: 2011 August-September Flow test results from three more wells at Bua Ban North B. September Install MOPU (mobile offshore production unit) at Bua Ban North A and begin production testing on wells drilled earlier this year. August-October Exploration/appraisal drilling at Bua Ban North A to further define extent of Miocene. Q4/11 Exploration drilling at Bua Ban South. Q4/11 Drill commitment well on G5/50 Block. Q4/11 Drill water injection wells at Songkhla A, subject to government approval. 2012 Further exploration drilling at Bua Ban North A/B. Further exploration drilling at Songkhla H likely mid-year, following receipt of the production license. APICO set to drill exploration well on L27-43 Block (onshore) targeting potentially significant structure.

THAILAND
Moving past the volatility? Located in Southeast Asia (Exhibit 3), Thailand has gone through a period of volatility over the last few years after a military coup in September 2006 ousted then Prime Minister Thaksin Shinawatra. In early 2008, a pro-Thaksin coalition government was formed, protested against and dissolved following the court ruling that the coalition had violated election laws. Thaksin supporters, known as the Red Shirts, rioted periodically in 2009 and 2010, although Thaksin had fled abroad in late 2008. In July 2011, Thaksins sister Yingluck Shinawatra won the federal election and has since been appointed Prime Minister. Thailand ranks 43rd on Euromoneys country risk rating; China ranks 39th and Brazil 42nd. According to the CIA Factbook, the country has a free-enterprise economy, generally pro-investment policies and well-developed infrastructure. We note coastal areas of the country are impacted by the Pacific cyclone season from June-November. Exhibit 3 Map of Thailand

Source: www.thailand-maps.com
Member of the Investment Industry Regulatory Organization of Canada (IIROC) Participating Organization Toronto Stock Exchange and Toronto Venture Exchange Member Canadian Investor Protection Fund (CIPF) David Buma 416.603.7381 ext. 240 db@mpartners.ca

COASTAL ENERGY COMPANY

August 26, 2011
Attractive fiscal terms Oil production in Thailand has increased steadily over the last thirty years, reaching 339,000 boed in 2009. In the Fraser Institutes 5th Annual Global Petroleum Survey published earlier this year, Thailand ranked 64th overall, up from 73rd, after Romania. In Asia, Thailand ranked second behind Japan. The Thailand III fiscal regime, which applies to projects awarded after 1986, offers relatively attractive fiscal terms to producers, namely: 5%-15% royalty payable on a sliding scale, based on the value of the monthly production volume on a block-by-block basis. At current production levels, the royalty is approximately 8%; the royalty is 9.4% at 15,000 boed and 11.2% at 25,000 boed. Special Remuneratory Benefit (SRB) The SRB was designed as a windfall profits tax for high oil price environments and is a function of the annual petroleum profit per metre drilled. The tax rate applied is determined on a sliding scale, ranging from 0-75%. Coastals offshore concessions provide a 600,000 metre allowance to be added to the actual drilling total. Coastal was not required to pay any SRB in 2010. 50% Petroleum Income Tax (PIT) Corporate earnings are taxed at a rate of 50% and determined as revenue less royalties, operating expenses, depreciation allowance, SRB and any loss carry forwards that can be applied for up ten years. Coastal did not pay any PIT in 2010. In addition, Coastal is required to pay a portion of its net profits generated on the G5/43 Block in consideration of certain work performed on the Block in 2005; once the loss allowances are up, 2.5% of net profits are to be paid to Elk Petroleum Thailand and 1% to Auldana Advisors Corporation. Other companies operating in Thailand include: Salamander Energy (SMDR-LN, not rated) BG (BG-LN, not rated) Chevron (CVX-N, not rated) Pan Orient Energy (POE-TSXV, not rated)

Thailand oil production has increased steadily

Exhibit 4 - Thailand Oil Production (1980-2009) 360 300 Thousand Bopd 240 180 120 60 0 1980 Source: EIA. 1985 1990 1995 2000 2005

Member of the Investment Industry Regulatory Organization of Canada (IIROC) Participating Organization Toronto Stock Exchange and Toronto Venture Exchange Member Canadian Investor Protection Fund (CIPF)

David Buma 416.603.7381 ext. 240 db@mpartners.ca

COASTAL ENERGY COMPANY

August 26, 2011

ASSET DESCRIPTION
Majority of assets located offshore Thailand Coastal was formed following the 2006 merger of PetroWorld Corp and NuCoastal, which each held 50% of Block G5/43. NuCoastal also held significant acreage onshore in northeastern Thailand. At the same time, NuCoastal acquired an additional 10.7% of APICO from PH Gas LP, bringing its ownership of APICO to 36.1%. PetroWorld, which traded on the TSX Venture at the time, changed its name to Coastal Energy as part of that process. Today, Coastal owns assets in four producing fields in Thailand. The majority of Coastals production and exploration efforts are focused offshore, where the company has holdings of approximately 5,000 km2 (1.4MM acres). The periodic land relinquishment for Coastal is next scheduled for 2013. Average production was 9,494 boed in Q2/11, with 7,203 bbld of oil (offshore) and 2,291 boed of natural gas (onshore). We profile the companys operating areas below.

Exhibit 5 - Coastal Interests in Thailand

OFFSHORE
Offshore wells generally shallow, inexpensive Coastals offshore holdings are located in the Gulf of Thailand with average water depths of 50-100 feet. Wells in the fields are generally shallow at 3,0004,000 feet and can be drilled and completed for $2.5MM-$3MM. The companys holdings consist of Blocks G5/43 and G5/50. The companys three producing fields, Songkhla, Bua Ban, and Bua Ban North, are in Block G5/43 and account for all of Coastals oil production. The production licenses governing those three fields encompass an area of 347 km2. Offshore reserves stood at 27.1MM bbl at year-end of which 8.9MM boe was classified as developed/producing; management estimates exploration success since that Source: Company reports. time has added almost 70MM bbls in recoverable resources. We have assumed three-quarters of that total will be converted to 2P reserves. Producing light/medium oil, Coastal receives approximately 95% of the Dubai benchmark price for its offshore production. The companys offshore exploration drilling program this year has been focused on the Bua Ban field, achieving a 92% success rate on 12 exploration wells drilled to date. The Miocene trend has proven to be a successful play at Bua Ban North A & B, having been previously considered unproductive in the Songkhla basin. With positive results stemming from the eastern fault block, the company believes it could extend the field along the Miocene fault extending over three kilometers between Bua Ban North A and B. In 2010, the companys exploration drilling program was split between the Songkhla and Bua Ban fields and achieved a success rate of 33%. Of note, wells targeting the Oligocene interval at Bua Ban generally encountered thinner pay zones than expected and had led to a reduction in 2P reserve estimates in 2010.

92% drilling success rate to date

Member of the Investment Industry Regulatory Organization of Canada (IIROC) Participating Organization Toronto Stock Exchange and Toronto Venture Exchange Member Canadian Investor Protection Fund (CIPF)

David Buma 416.603.7381 ext. 240 db@mpartners.ca

COASTAL ENERGY COMPANY

August 26, 2011

Exhibit 6 Coastal Offshore Prospects

Source: Company reports.

Working to improve RF at Bua Ban

BUA BAN/BUA BAN NORTH Production from the Bua Ban field averaged 1,418 bopd in Q2/11 and has experienced a steady decline since production from the field began at 3,100 bopd in Q3/10. Development of Bua Ban has revealed that the reservoir is significantly different from what had been expected, with channel sands of varying width but generally thinner pay zones and the reservoir pressure tending to be low requiring submersible pumps. Coastal is currently in the process of adding water supply to increase injection volumes to improve the reservoir performance and is evaluating development of the reservoir with horizontal wells and fracture stimulation. Exploration efforts this year have focused on the Bua Ban North A & B fields and proven highly successful, reporting a 92% success rate on 12 exploration wells drilled year-to-date. The companys success this year has generally occurred in the Miocene, opening it up as a prospective play; with the Miocene previously considered unproductive, this has allowed the company to begin remapping other plays. The focus had been on the Oligocene previously. We highlight some of the companys recent activity: May 10, 2011 Bua Ban North B-02 Thicker than anticipated sands encountered in the Miocene with better than expected reservoir quality. The reservoir characteristics in the Eocene were also better than anticipated. May 16, 2011 Bua Ban North B-03 Drilled to a total depth of 4,420 feet, the well encountered 48 feet of net pay and water saturations of 33%, the lowest water saturation seen to date in the Miocene. The company noted this discovery proved that all Miocene fault block configurations along the western edge of the basin are capable of trapping hydrocarbons.

Significant potential at Bua Ban North as Miocene proves productive

Member of the Investment Industry Regulatory Organization of Canada (IIROC) Participating Organization Toronto Stock Exchange and Toronto Venture Exchange Member Canadian Investor Protection Fund (CIPF)

David Buma 416.603.7381 ext. 240 db@mpartners.ca

COASTAL ENERGY COMPANY

August 26, 2011
Exhibit 7 - Coastal Bua Ban Prospects
May 25, 2011 Bua Ban North B-05 A net pay of 178 feet with 27% porosity was encountered in the Miocene trend. In light of the drilling success, the decision was made to begin testing Bua Ban North B, rather than move the rig to Bua Ban North A as originally planned. The well is currently producing 2,500 boed. June 6, 2011 Bua Ban North B-04 A net pay of 64 feet with 27% porosity was encountered in the Miocene and confirmed the discovery made by B-02. June 15, 2011 Bua Ban North B-06 A net pay of 69 feet of net pay with 28% porosity was encountered in the Miocene interval. Samples recovered had an API gravity of 36 degrees. Management had expected the well to be used for aquifer support; instead the well encountered a significant oil pay zone and is connected to the other wells in the same fault block. The well has since been completed and is producing at 2,000 boed. June 27, 2011 Bua Ban North B-08 This well successfully appraised the discovery made by the B-03 well, encountering 92 feet of net pay with 28% porosity. As a result, the lowest known oil was moved 140 feet lower in this fault Source: Company reports. block. Combined with results from a water injection well (B-07), updated mapping indicates the structural close is approximately 2,800 acres in size. The well has since been completed and is producing at 2,000 boed. July 28, 2011 Songkhla H Drilled to 9,256 feet, the well encountered 32 feet of net pay with 20% porosity in Oligocene interval. The company estimates the well has the potential to produce in excess of 3,000 boed of 29 degree oil, although a production license is not expected until next year. With this the first well in the area, it also opens up significant additional exploration potential.

First four wells flowing at 7,100 boed combined

Exploration additions significant relative to 2P reserves

With positive flow testing of the first four wells, the full potential of the drilling program should emerge by September as the remaining three wells are tested; we expect Bua Ban North to be a key driver of production growth going forward. Management estimates the recent exploration efforts have added close to 62MM bbls from Bua Ban North to recoverable resources (Exhibit 8). This assumes a 30% recovery factor, although the companys production record from the Miocene is limited to approximately 18 months. Salamander Energy, with production coming from the Miocene in a similar basin to the north, has experienced a recovery factor of approximately 38% via horizontal wells due to the thinner pay there. Coastal anticipates the majority of the resources will be assigned to 2P reserves which would result in the more than doubling of total reserves. Management expects to drill delineation wells to further define the extent of the Miocene in Bua Ban North and remap the Miocene trend along the western side of the basin toward Benjarong. The company currently expects to begin exploration drilling targeting the Miocene at Bua Ban South in Q4/11.

Member of the Investment Industry Regulatory Organization of Canada (IIROC) Participating Organization Toronto Stock Exchange and Toronto Venture Exchange Member Canadian Investor Protection Fund (CIPF)

David Buma 416.603.7381 ext. 240 db@mpartners.ca

COASTAL ENERGY COMPANY

August 26, 2011
Exhibit 8 - Coastal Reserves Profile (2P, MM boe) Offshore December 31, 2008 41.5 December 31, 2009 32.9 December 31, 2010 24.8 Exploration Additions - 2011 to date 70.7 Bua Ban North A - Miocene 9.8 Bua Ban North A - Oligocene 1.4 Bua Ban North B - Miocene 47.2 Bua Ban North B - Oligocene 3.3 Songkhla H - Oligocene 9.0 Conversion of Additions to 2P (75%) 53.0 Estimated Production 3.9 Potential Year-End 2P 2011 73.9

Onshore 29.2 21.8 20.9 0.0 0.8 20.1

Total 70.7 54.7 45.7 70.7 9.8 1.4 47.2 3.3 9.0 53.0 4.7 94.0

*Note: Exploration additions are based on management's RF estimate of 30%. Source: Company reports; M Partners estimates.

SONGKHLA Songkhla now a secondary priority Production from Songkhla averaged 5,785 bopd in Q2/11, up significantly from 3,509 bopd in Q4/10, when production was offline for 23 days due to the upgrade of platform processing equipment and an active typhoon season. The Songkhla field was the first source of offshore oil production for Coastal, beginning in November 2008 at approximately 3,000 bopd from the lower Oligocene (8,000-9,000 feet). With a lack of water injection support, production has been affected by coning. Despite a successful exploration drilling campaign at Songkhla in 2010, additional work is not likely in the area until at least Q4/11 due to the ongoing work at Bua Ban North. In Q4/10, the company drilled three exploration wells that discovered new reservoirs in the Songkhla East and Songkhla North zones. Management estimates those reservoirs hold 26MM and 54MM bbls OOIP, respectively however, because these three wells are not in communication with the main Songkhla reservoir, they are not benefitting from existing water wells. Potentially starting in Q4/11 or Q1/12 following EIA approval, Coastal intends to drill water injection wells required for the eastern fault block at Songkhla due to lack of aquifer support. The company is also considering drilling 4-5 development wells in the Songkhla North and East zones.

Exhibit 9 - Coastal Production By Field 12,000 9,000 Boed 6,000 3,000 0 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Onshore Q4/10 Q1/11 Q2/11

Source: Company reports.

Songkhla

Bua Ban

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David Buma 416.603.7381 ext. 240 db@mpartners.ca

COASTAL ENERGY COMPANY

August 26, 2011

ONSHORE
Onshore natural gas production nonoperated, captive market Production net to Coastal from its Sinphuhorm onshore assets is approximately 13MMcfd of natural gas and 55 boed of condensates (2,291 boed). Through its 36.1% stake in APICO LLC, Coastal owns a 12.6% working interest of the Sinphuhorm gas field operated by Hess Corporation (HES-NYSE, not rated). The Sinphuhorm field supplies the Nam Phong power plant operated by the Electricity Generating Authority of Thailand under a 15-year sales agreement signed in 2006. Gross production at Sinphuhorm is currently 102MMcfd, up from 83MMcfd three years ago. Production growth at Sinphuhorm is a function of increased demand in the region as it is a captive market given the lack of infrastructure; Coastal estimates the maximum flow rate is 140MMcfd. The natural gas price received by APICO is adjusted monthly, based on the six-month rolling average of the Singapore fuel oil price and currently stands at approximately $9.40/mcf. Through APICO, Coastal also owns working interests in other onshore assets in northeast Thailand, including in the Dong Mun, Si That and L15/43 exploration blocks (Exhibit 10). Total onshore reserves stood at 20.9MM boe at December 31, 2010. Although APICO is generally concentrated on production given the extended reserve life and captive market, the company is set to drill an exploration well on L27-43 Block over the next 12 months, targeting a potentially significant structure. Exhibit 10 Coastals Onshore Interests

Source: Company reports.

LOCAL INFRASTRUCTURE
Coastal produces into its partially owned floating storage and offloading vessel (FSO) in the Bua Ban field as infrastructure in the Gulf of Thailand is limited; major infrastructure investments in the region are unlikely in the near-term given current levels of production combined with ongoing security concerns in the southern portion of the country. As such, production is stored in the FSO; PTT PCL, the national energy company (PTT-SET, not rated), regularly sends a tanker to the FSO to pick up batches of 150K-200K bbls at a time. Onshore, with limited infrastructure, the companys ability to market the produced natural gas is exclusively a function of local demand.

COMPANY OUTLOOK
Member of the Investment Industry Regulatory Organization of Canada (IIROC) Participating Organization Toronto Stock Exchange and Toronto Venture Exchange Member Canadian Investor Protection Fund (CIPF) David Buma 416.603.7381 ext. 240 db@mpartners.ca

COASTAL ENERGY COMPANY

August 26, 2011
Drilling efforts to date potentially more than doubled 2P reserves Drilling efforts to date have added significantly to the companys resource base. Starting the year with 2P offshore reserves of 24.8MM boe, management indicated it expects the majority of the 70MM boe in recoverable resources added year-to-date will move to 2P reserves. Assuming three-quarters or 52MM boe is determined to be 2P reserves, this would result in the more than tripling of offshore reserves. With average offshore production estimated to be 10,751 boed in 2011, the additional reserves would replace production 12fold and increase the offshore reserve life to almost 18 years. Onshore, with 2P reserves of 20.9MM boe at December 31, 2010 and average production estimated to be 2,217 boed in 2011, the reserve life stood almost 26 years. The recent success at Bua Ban North A/B supports the companys current inventory of more than 30 prospects, particularly as the field could be extended along the three kilometre Miocene fault line between Bua Ban North A and B. Furthermore, Coastal has reported an exploration drilling success rate of 92% in 2011 to date, up from 33% in 2010. Activity over the remainder of the year is to be focused on testing of the recent discoveries at Bua Ban North and exploration at Bua Ban South. The focus is expected to shift back to Songkhla A and H in 2012. Coastal expects capex of $135MM in 2011, split evenly between exploration and development activities. We highlight the companys exploration potential in Exhibit 11, which excluding the Songkhla H Oligocene zone, totals 270MM boe in unrisked recoverable prospects.

(MM boe, P50)

Exhibit 11 - Coastal Prospects Unrisked STOOIP Bua Ban North A & B - Miocene 392.6 Bua Ban North A & B - Upper Oligocene 27.2 Total 419.8 59.0 31.7 90.7 42.0 42.0 84.0 60.9 141.5 202.4 133.9 68.5 202.4 999.3

Recovery Factor 30% 30% 30% 30% 15% 25% 30% 30% 30% 23% 20% 21% 30% 20% 27% 27%

Unrisked Recoverable 117.8 8.2 126.0 17.7 4.8 22.5 12.6 12.6 25.2 14.3 28.3 42.6 40.2 13.7 53.9 270.2

Songkhla H - Miocene M100, M500 Lower Oligocene & Eocene Total Buried Hill - Karstified Limestone Buried Hill 2 - Karstified Limestone Total Bua Ban Terrace - Miocene/Oligocene Bua Ban Terrace - Eocene Total Bua Ban South - Songkhla G - Miocene Bua Ban South - Terrace - Eocene Total As of June 27, 2011 Source: Company reports.
Average production to grow at 42% CAGR from 2010-2013

We estimate an average production CAGR of 42% from 2010-2013; absolute production is expected to grow from 9,670 boed in 2010 to 28,050 boed in 2013E. We expect the development of Bua Ban North A/B to be a key contributor to that growth, as well as potential contributions from Songkhla H and additional drilling in the Bua Ban and Songkhla fields. We expect oil to dominate the companys production as the growth offshore should significantly outpace that of the companys onshore natural gas assets. Our 2011 and 2012 forecasts are based on the following: 2011 We forecast average production of 12,967 boed in 2011, up from 9,670 boed in 2010. However, with 7,000 boed coming from Bua Ban North B since July and potentially another 5,000 boed online by year-end from wells drilled as part of the same program, we estimate the exit rate will exceed 18,000 boed. For the year, we expect oil to account for 83% of total production. 2012 We forecast average production of 22,838 boed, up 76% YOY. We expect further contributions from Bua Ban North as Coastal further exploits that field as well as potentially 5,000 boed from Songkhla H by mid-year once the production license is issued, particularly if the company begins to use a second drilling rig. With onshore natural gas production expected to grow at a relatively slower rate of 12% YOY, the oil/natural gas balance should shift further toward oil.

Member of the Investment Industry Regulatory Organization of Canada (IIROC) Participating Organization Toronto Stock Exchange and Toronto Venture Exchange Member Canadian Investor Protection Fund (CIPF)

David Buma 416.603.7381 ext. 240 db@mpartners.ca

COASTAL ENERGY COMPANY

August 26, 2011

Exhibit 12 - Coastal Production Outlook (2010-2013E)

30,000 25,000 Net Boe/d 20,000 15,000 10,000 5,000 0 2010 2011E 2012E 2013E

Oil

Natural Gas

Source: Company reports; M Partners estimates.

Operating cash flow to stay ahead of capex We forecast EBITDAX to grow from $114MM in 2010 to $252MM in 2011E, $396MM in 2012E and $428MM in 2013E (Exhibit 13). This assumes an average Dubai price of $98.75/bbl in 2012 moving to a long-term price of $87.50/bbl by 2013, natural gas price of $7.00/mcf and long-term operating costs of $25.00/boe. Of note, revenue is recognized upon lifting and as such, depending on the timing, could result in some volatility on a quarterly basis. Operating cash flow is expected to keep pace with capex over the forecast horizon; on a per share basis, we expect $1.85 in 2011E, $3.21 in 2012E and $3.35 in 2013E. Coastals $135MM 2011 capex program appears to be fully funded, considering the cash balance of $4MM as of December 31, 2010 and operating cash flow of $215MM expected over the course of the year.

Exhibit 13 - Coastal Outlook (2009-2013E) (in US$, MM) Dubai Price C$/US$ Net Production (boed) Net Revenue Operating Netback (per boe) EBITDAX Operating Cash Flow Capex Net Total Debt Cash Flow Per Share 2009 $61.77 $1.14 7,416.0 80.5 $29.42 37.4 36.9 (77.7) 59.9 $0.38 2010 $78.11 $1.03 9,670.0 177.2 $45.07 114.3 121.7 (133.4) 109.5 $1.08 2011E $106.57 $0.97 12,967.3 363.9 $65.18 252.4 214.9 (135.0) 25.1 $1.85 2012E $98.75 $0.97 22,837.5 624.8 $56.70 395.6 378.6 (250.0) (116.8) $3.21 2013E $90.00 $0.97 28,050.0 702.9 $49.42 428.0 398.6 (260.0) (266.5) $3.35

Source: Company reports; M Partners estimates.

KEY SENSITIVITIES
Member of the Investment Industry Regulatory Organization of Canada (IIROC) Participating Organization Toronto Stock Exchange and Toronto Venture Exchange Member Canadian Investor Protection Fund (CIPF) David Buma 416.603.7381 ext. 240 db@mpartners.ca

COASTAL ENERGY COMPANY

August 26, 2011
We illustrate the sensitivity of both NAV and operating cash flow to a number of key inputs in Exhibit 14, namely the price of Dubai crude, the Baht/US$ exchange rate, operating expenses per boe and discount rate. With the company reporting in US$, sensitivity to the C$/US$ is primarily on the translation of the NAV to C$. We note the shares trade in C$ as well.

(per share, NAV in C$) 30% 20% 10% 0% -10% -20% -30%

Change in input

Exhibit 14 - Sensitivity Table Discount Dubai Price Baht/US$ OpEx/boe CF (2012) NAV CF (2012) NAV CF (2012) NAV Rate NAV $4.80 $26.94 $3.30 $17.96 $2.71 $13.92 $16.19 $4.27 $23.88 $3.27 $17.91 $2.88 $15.21 $16.73 $3.74 $20.82 $3.24 $17.86 $3.04 $16.51 $17.27 $3.21 $17.81 $3.21 $17.81 $3.21 $17.81 $17.81 $2.67 $14.75 $3.18 $17.76 $3.38 $19.11 $18.35 $2.14 $11.69 $3.15 $17.71 $3.55 $20.41 $18.89 $1.61 $8.63 $3.12 $17.66 $3.72 $21.69 $19.43 $98.75 $90.00 $0.97 $0.97 $27.59 $25.00 10%

Assumption*

* NAV assumption reflects long-term assumption.

Source: M Partners estimates.

MANAGEMENT PROFILE
Experienced management team Coastal is led by an experienced team. Management has extensive international experience, operating in both onshore and offshore oil-producing areas around the world including Southeast Asia. We highlight key managers below: Randy Bartley, President & CEO: Mr. Bartley brings more than 33 years of industry experience to the company, including exploration and development in both the international onshore and offshore operating environments. Prior to Coastal, Mr. Bartley co-founded and served as COO at Erskine Energy for four years, and held senior management positions at El Paso and Coastal Corporation. William Phelps, CFO: Mr. Phelps has served as CFO of Coastal since its inception in 2005 and as CFO of NuCoastal Corporation and NuCoastal Thailand, the predecessor company of Coastal Energy prior to that. Before entering the oil & gas industry, Mr. Phelps was a VP in the energy investment banking group at Citigroup. John Griffith, Thailand Country Manager: Mr. Griffith joined Coastal in 2008. Prior to this, Mr. Griffith served as Operations Manager for Erskine Energy focusing on domestic natural gas. Mr. Griffith brings more than 30 years experience with international experience including West Africa, the North Sea, Latin America and Southeast Asia at a number of firms, including El Paso. Lloyd Barnaby Smith CMG, Chairman: Mr. Smith was named Chairman of the Board earlier this year, having served as a non-executive director since 2006. Mr. Smith has held a number of senior positions within the Foreign and Commonwealth Office, including Head of South Asia Department and British Ambassador to both Thailand (2000-2003) and Nepal. Mr. Smith replaced Mr. Bernard de Combret, who resigned as Chairman of the Board in April 2011 and had held a number of positions with Elf and Total Group, including Deputy Chairman of the Executive Board of Total. M&D own 4.7% of Coastal shares, control 21.7% of votes Total management and directors holdings total 5.3MM shares or 4.7% of shares outstanding. Of note, Oscar Wyatt Jr., founder of NuCoastal Corporation, Coastals predecessor company, owns 27MM shares. As part of the NuCoastal-PetroWorld transaction, Mr. Wyatts share voting rights were limited to 10% with the remaining 19MM shares subject to a voting trust agreement. Those votes exercised by the companys four outside directors.

RISKS
We note the following risks:
Member of the Investment Industry Regulatory Organization of Canada (IIROC) Participating Organization Toronto Stock Exchange and Toronto Venture Exchange Member Canadian Investor Protection Fund (CIPF) David Buma 416.603.7381 ext. 240 db@mpartners.ca

COASTAL ENERGY COMPANY

August 26, 2011
Concentration risk With all of its assets located in Thailand, Coastal faces significant country concentration risk. The company also faces significant customer concentration risk; Coastal has two primary customers, one for its offshore oil production and one for its natural gas production. Although the company should be able to source another tanker to take delivery of the produced crude if it were required, its natural gas production is subject to a captive market. Execution risk Coastals ability to generate revenue hinges upon its success in discovering and producing hydrocarbons. Although the company has established a solid track record to date, both the exploration and development processes involve significant risk and there can be no guarantee the company will be successful. Access to drilling rigs, materials and qualified local labour could limit the companys ability to meet its production growth targets. Infrastructure risk With limited local infrastructure, Coastal produces and stores its crude offshore, which is then periodically collected by tanker. If tankers were unable to reach the platform due to weather or civil unrest, sales would be impacted. Political risk Thailand has experienced volatility, with a series of governments in power following the military coup in 2006. Some violence has occurred over this time, focused primarily in the south of Thailand; Coastals operations were unaffected. In July 2011, Yingluck Shinawatra won the federal election and has since been appointed Prime Minister. Coastals licenses are issued by the government; although not expected, a change to the laws governing natural resources could result in changes to those agreements. Commodity price risk Coastal revenue is the direct function of oil prices and as such, is subject to price volatility. The company hedges approximately 15% of its total production as required by its revolving credit facility; this in turn can create significant volatility in non-cash earnings as those contracts are marked to market. The natural gas price received by APICO is adjusted monthly, based on a sixmonth rolling average of Singapore fuel oil. Financing risk We expect Coastal will require minimal external financing over the near to mediumterm in order fund its development program. However, if commodity prices decline, cash flow would be impacted and either delay certain parts of the program or require external financing to cover any shortfall. In the event the company experiences cost-overruns, additional financing may also be required. Foreign exchange risk The operating currencies of Coastal are the Thai baht and the US dollar. The company reports in US dollars. With a minimum level of expenses in Canadian dollars, the most significant effect of the C$ is on the share price as it relates to those shares trading on the Toronto Stock Exchange.

APPENDIX A COASTAL SUMMARY

Member of the Investment Industry Regulatory Organization of Canada (IIROC) Participating Organization Toronto Stock Exchange and Toronto Venture Exchange Member Canadian Investor Protection Fund (CIPF)

David Buma 416.603.7381 ext. 240 db@mpartners.ca

COASTAL ENERGY COMPANY

August 26, 2011
Coastal Summary (2009-2013E) (Fiscal Year Ended December 31; in US$, MM unless noted otherwise) Assumptions Dubai Average C$/US$ Baht/US$ Production Oil (bbls/d) Natural Gas (boed) Total (boe/d, 6:1 basis) % Gas BOE YOY Growth Netbacks (ex-APICO) Revenue Royalties Operating Costs Field Netback Royalties (as % of Revenue) Per Share Metrics CFPS (FD) YOY Growth Prdn/Debt Adj Share (boe/d/mm b. shrs) YOY Growth Internal Capex/Cash Flow Net Debt (Net Cash) Leverage Net Debt to Total Capitalization Debt/Cash Flow (trailing) Debt/Cash Flow (One-Yr Fwd) Source: Company reports; M Partners estimates. 2009 $61.77 $1.14 34.3325 Q1/10 $76.01 $1.04 32.88 Q2/10 $77.94 $1.03 32.38 Q3/10 $74.01 $1.04 31.62 Q4/10 $84.46 $1.01 29.98 2010 $78.11 $1.03 31.715 Q1/11 $100.81 $0.99 30.53 Q2/11 $110.47 $0.97 30.3 Q3/11E $110.00 $0.97 30.0 Q4/11E $105.00 $0.97 30.0 2011E $106.57 $0.97 30.2 2012E $98.75 $0.97 30.0 2013E $90.00 $0.97 30.0

5,534 1,882 7,416 25.4% na

7,068 1,855 8,923 20.8% 77.6%

7,914 1,900 9,814 19.4% 11.8%

10,065 1,730 11,795 14.7% 115.7%

5,557 1,995 7,552 26.4% 2.2%

7,653 2,017 9,670 20.9% 30.4%

8,199 1,926 10,125 19.0% 13.5%

7,203 2,291 9,494 24.1% -3.3%

12,300 2,300 14,600 15.8% 23.8%

15,300 2,350 17,650 13.3% 133.7%

10,751 2,217 12,967 17.1% 34.1%

20,363 2,475 22,838 10.8% 76.1%

25,375 2,675 28,050 9.5% 22.8%

$54.14 $3.68 $20.96 $29.42 6.8%

$69.41 $5.12 $15.41 $48.88 7.4%

$72.00 $5.45 $14.18 $53.17 7.6%

$65.79 $6.68 $15.79 $44.78 10.2%

$78.61 $6.39 $41.50 $28.78 8.5%

$70.06 $5.97 $19.42 $45.07 8.6%

$98.03 $7.64 $29.06 $58.19 8.1%

$122.73 $8.41 $28.69 $71.19 7.8%

$106.65 $9.29 $29.00 $68.47 8.7%

$100.98 $9.35 $28.50 $63.79 9.2%

$105.39 $8.85 $28.78 $65.18 8.6%

$94.16 $9.94 $27.59 $56.70 10.5%

$85.92 $9.84 $26.68 $49.42 11.5%

$0.38 10647.2% 72.5 nm 2.1x 59.9

$0.27 1947.1% 79.8 83.0% 1.2x 61.2

$0.29 110.6% 85.8 3.4% 1.6x 86.1

$0.42 408.3% 101.4 96.7% 0.2x 71.3

$0.10 -22.9% 62.9 -13.1% 3.1x 109.5

$1.08 186.4% 77.8 7.3% 1.1x 109.5

$0.34 22.4% 84.0 5.1% 0.9x 109.9

$0.26 -12.8% 77.5 -9.7% 1.1x 118.1

$0.58 38.8% 122.5 20.8% 0.5x 79.3

$0.67 nm 153.0 143.2% 0.4x 25.1

$1.85 nm 114.8 47.5% 0.6x 25.1

$3.21 73.6% 213.0 85.5% 0.7x -116.8

$3.35 4.4% 273.3 28.3% 0.7x -266.5

29.9% 1.6x 0.6x

30.0% 0.9x 0.6x

43.6% 1.0x 1.1x

24.5% 0.6x 0.5x

49.3% 0.9x 0.6x

49.3% 0.9x 0.6x

46.1% 0.8x 0.5x

46.2% 0.9x 0.4x

25.3% 0.5x 0.2x

6.5% 0.1x 0.1x

6.5% 0.1x 0.1x

-18.0% -0.3x -0.3x

-28.9% -0.7x -0.7x

APPENDIX B COASTAL INCOME STATEMENT

Member of the Investment Industry Regulatory Organization of Canada (IIROC) Participating Organization Toronto Stock Exchange and Toronto Venture Exchange Member Canadian Investor Protection Fund (CIPF)

David Buma 416.603.7381 ext. 240 db@mpartners.ca

COASTAL ENERGY COMPANY

August 26, 2011
Coastal Income Statement (2009-2013E) (Fiscal Year Ended December 31; in US$, MM unless noted otherwise) Oil Sales, Net of Royalties Other Income (Expenses) Total Revenue Production Expenses Depreciation & Depletion G&A Exploration EBIT Interest Expense (Income) EBT Before Special Items Special Items (Gain) Earnings Before Tax, APICO and Non-Controlling In Share of Net Income from APICO LLC EBT and Non-Controlling Interest Current Taxes Deferred Taxes Non-Controlling Interest Net Earnings Wghtd Avg Shares OS - Basic Wghtd Avg Shares OS - Diluted Diluted EPS Before Special Items Diluted EPS Income Statement Statistics Growth Oil Sales Revenue EBITDAX EBIT Net Earnings Before Special Items Net Earnings Diluted EPS Before Special Items Diluted EPS Margin EBITDAX Margin EBIT Margin EBT Margin Before Special Items EBT Margin Net Margin Before Special Items Net Margin Tax Rate EBITDAX Source: Company reports; M Partners estimates. 2009 80.5 (3.9) 76.6 33.5 23.7 19.6 0.0 (0.2) 5.3 (5.5) 2.5 (8.0) 8.5 0.5 0.0 0.7 (0.1) (0.1) 98.2 98.2 $0.02 ($0.00) Q1/10 45.9 0.1 46.0 11.0 6.0 3.8 9.3 16.0 0.9 15.1 0.0 15.1 3.0 18.1 1.0 5.6 (0.0) 11.6 109.1 113.4 $0.10 $0.10 Q2/10 39.0 0.0 39.0 8.2 3.7 4.1 0.1 23.0 0.9 22.1 0.0 22.1 3.2 25.3 (0.9) 13.6 0.1 12.5 109.5 112.6 $0.11 $0.11 Q3/10 61.9 (0.3) 61.6 16.1 8.3 4.3 0.0 32.7 0.7 32.0 0.0 32.0 2.7 34.7 0.0 9.9 (0.2) 25.1 109.6 113.2 $0.22 $0.22 Q4/10 30.5 (19.1) 11.4 18.0 11.7 8.0 62.8 (89.1) 1.5 (90.6) 10.7 (101.3) (0.9) (102.2) 0.0 (40.9) 1.4 (62.7) 109.6 109.6 ($0.47) ($0.57) 2010 177.2 (22.7) 154.5 53.4 56.6 20.3 0.0 24.2 2.5 21.7 10.7 11.0 11.0 22.0 (0.0) 16.0 1.2 4.9 109.5 113.2 $0.14 $0.04 Q1/11 66.7 (21.1) 45.6 22.2 13.3 5.3 5.6 (0.7) 1.4 (2.1) 0.0 (2.1) 3.3 1.2 0.0 3.2 0.3 (2.4) 111.3 115.3 ($0.02) ($0.02) Q2/11 59.6 (2.0) 57.6 17.1 11.7 6.5 0.9 21.4 1.2 20.1 0.0 20.1 4.3 24.4 0.0 12.0 0.6 11.8 112.0 115.2 $0.10 $0.10 Q3/11E 109.1 0.9 110.0 32.5 19.6 8.3 1.6 48.0 1.1 46.9 0.0 46.9 3.9 50.8 0.0 23.5 0.4 27.0 112.8 117.1 $0.23 $0.23 Q4/11E 128.5 6.5 135.0 39.7 24.4 10.0 1.7 59.3 0.9 58.4 0.0 58.4 3.6 62.0 0.0 29.2 0.4 32.4 113.0 117.3 $0.28 $0.28 2011E 363.9 (15.7) 348.2 111.5 68.9 30.1 9.7 127.9 4.6 123.3 0.0 123.3 15.1 138.4 0.0 67.8 1.7 68.8 112.3 116.2 $0.59 $0.59 2012E 624.8 3.9 628.7 204.5 129.7 38.0 12.5 243.9 2.3 241.6 0.0 241.6 13.4 255.0 2.4 119.1 1.6 132.0 113.7 118.0 $1.12 $1.12 2013E 702.9 1.2 704.0 246.4 161.6 44.1 13.0 238.8 0.8 238.0 0.0 238.0 15.7 253.7 14.2 112.5 1.6 125.4 114.7 119.0 $1.05 $1.05

1971.8% 976.0% nm nm nm nm nm

498.8% 1038.4% nm nm nm nm nm

49.3% 99.5% nm nm nm nm nm

212.8% 552.6% nm nm nm nm nm

13.3% -64.8% nm nm nm nm nm

120.2% 205.3% nm 765.4% nm 651.4% nm

45.5% 19.7% nm nm nm nm nm

52.8% 32.2% -6.9% -5.7% -5.7% -7.7% -7.7%

76.4% 62.3% 46.5% 7.6% 7.6% 4.1% 4.2%

321.6% nm nm nm nm nm nm

105.4% nm nm nm nm nm nm

71.7% 67.2% 90.7% 91.7% 91.7% 88.9% 88.9%

12.5% 8.2% -2.1% -5.0% -5.0% -5.8% -5.8%

46.5% -0.2% -6.8% -9.9% 2.2% -0.1% -9.3% 37.4

77.4% 34.8% 33.0% 33.0% 25.2% 25.2% 43.3% 35.5

76.5% 58.9% 56.6% 56.6% 32.1% 32.1% 57.3% 29.9

71.9% 52.9% 51.7% 51.7% 40.5% 40.5% 30.9% 44.5

14.5% -292.3% -297.3% -332.4% -170.7% -205.9% 40.3% 4.4

64.5% 13.7% 12.3% 6.2% 8.8% 2.7% 144.9% 114.3

63.7% -1.0% -3.1% -3.1% -3.5% -3.5% -152.4% 42.5

66.2% 35.9% 33.8% 33.8% 19.8% 19.8% 59.6% 39.5

66.2% 44.0% 43.0% 43.0% 24.7% 24.7% 50.0% 72.2

64.1% 46.1% 45.4% 45.4% 25.2% 25.2% 50.0% 82.4

65.0% 35.2% 33.9% 33.9% 18.9% 18.9% 55.0% 236.6

63.3% 39.0% 38.7% 38.7% 21.1% 21.1% 50.3% 395.6

60.9% 34.0% 33.9% 33.9% 17.8% 17.8% 53.2% 428.0

APPENDIX C COASTAL BALANCE SHEET

Member of the Investment Industry Regulatory Organization of Canada (IIROC) Participating Organization Toronto Stock Exchange and Toronto Venture Exchange Member Canadian Investor Protection Fund (CIPF) David Buma 416.603.7381 ext. 240 db@mpartners.ca

COASTAL ENERGY COMPANY

August 26, 2011
Coastal Balance Sheet (2009-2013E) (Fiscal Year Ended December 31; in US$, MM unless noted otherwise) Assets Current Assets Cash Restricted Cash Accounts Receivable Inventories Prepaid Expenses & Other Future Income Taxes Total Current Assets Non-Current Assets Exploration & Evaluation Assets Property & Equipment Investment In & Advances to Apico Other Assets Total Non-Current Assets Total Assets Liabilities & Shareholders' Equity Current Liabilities Short-Term Borrowings Accounts Payable & Accrued Liabilities Obligations Under Finance Leases Long-Term Debt Due Within One Year Current Portion of Derivative Liabilities Notes Payable Other Current Liabilities Total Current Liabilities Non-current Liabilities Long-Term Debt Obligations Under Finance Leases Non-Current Portion of Derivative Liabilities Decommissioning Liabilities Other Liabilities Total Non-Current Liabilities Total Liabilities Shareholders' Equity Share Capital Contributed Surplus Retained Earnings Total Shareholders' Equity Non-Controlling Interest Total Liabilities & Shareholders' Equity 2009 Q1/10 Q2/10 Q3/10 Q4/10 2010 Q1/11 Q2/11 Q3/11E Q4/11E 2011E 2012E 2013E

21.2 3.8 6.1 5.3 0.6 0.0 37.1

21.2 3.8 6.1 5.3 0.6 0.0 37.1

4.6 3.0 6.7 8.8 0.3 0.0 23.5

19.9 7.4 21.4 6.8 0.2 0.0 55.6

3.9 16.4 10.3 12.8 0.7 0.0 44.1

3.9 16.4 10.3 12.8 0.7 0.0 44.1

15.9 9.8 25.2 12.0 0.3 0.0 63.2

2.2 20.9 12.1 17.1 0.3 0.0 52.6

23.1 20.9 42.0 18.2 0.7 0.0 104.8

53.7 20.9 63.5 23.8 0.7 0.0 162.7

53.7 20.9 63.5 23.8 0.7 0.0 162.7

140.6 20.9 101.9 41.2 1.0 0.0 305.5

245.1 20.9 110.1 49.3 15.8 0.0 441.2

0.0 233.0 55.2 0.3 288.5 325.6

44.9 189.5 55.2 0.3 290.0 327.0

0.0 300.2 56.8 0.3 357.3 380.8

0.0 311.5 53.2 0.3 365.0 420.5

31.1 246.2 47.3 0.3 324.9 368.9

31.1 246.2 47.3 0.3 324.9 368.9

42.1 244.2 49.6 0.3 336.2 399.5

75.2 234.7 54.1 0.3 364.3 416.8

84.2 236.6 56.9 0.3 378.0 482.8

93.5 234.3 59.5 0.3 387.6 550.3

93.5 234.3 59.5 0.3 387.6 550.3

163.5 272.1 69.1 0.3 505.0 810.5

236.3 284.7 80.4 0.3 601.6 1,042.8

0.0 31.3 0.0 10.3 0.0 0.0 28.3 69.9

0.0 31.4 0.0 10.3 0.0 0.0 28.2 69.9

0.0 51.6 0.0 8.2 0.0 0.0 21.0 80.7

0.0 59.8 0.0 0.1 0.0 0.0 0.0 59.9

0.0 53.6 0.9 36.3 10.1 0.0 0.0 100.8

0.0 53.6 0.9 36.3 10.1 0.0 0.0 100.8

0.0 51.6 0.8 38.2 24.0 0.0 0.0 114.5

0.0 49.8 0.8 28.7 21.9 0.0 0.0 101.2

0.0 72.9 1.0 21.4 21.1 0.0 0.0 116.4

0.0 91.2 1.1 16.4 15.6 0.0 0.0 124.3

0.0 91.2 1.1 16.4 15.6 0.0 0.0 124.3

0.0 111.3 1.6 7.1 12.2 0.0 0.0 132.2

0.0 107.1 0.0 6.6 11.2 0.0 0.0 124.9

24.3 0.0 0.0 2.8 27.7 54.8 124.6

24.3 1.4 0.0 4.1 23.7 53.4 123.3

20.4 0.0 0.0 8.4 47.2 76.1 156.8

56.1 0.0 0.0 10.8 59.9 126.8 186.7

35.1 0.6 6.6 17.7 11.9 71.8 172.6

35.1 0.6 6.6 17.7 11.9 71.8 172.6

40.4 0.7 11.0 18.3 15.1 85.5 200.0

48.9 0.4 5.4 20.6 27.1 102.3 203.5

47.1 0.4 5.4 20.6 50.5 124.0 240.4

43.0 0.4 5.4 20.6 79.7 149.1 273.4

43.0 0.4 5.4 20.6 79.7 149.1 273.4

35.9 0.4 5.4 20.6 198.8 261.0 393.3

29.3 0.4 5.4 20.6 311.3 366.9 491.8

198.1 13.9 (16.7) 195.4 5.6 325.6

198.1 13.9 (14.0) 198.1 5.6 327.0

200.6 14.9 2.1 217.6 6.4 380.8

200.8 15.5 11.3 227.6 6.2 420.5

201.3 16.0 (27.5) 189.7 6.6 368.9

201.3 16.0 (27.5) 189.7 6.6 368.9

207.4 15.3 (29.9) 192.8 6.7 399.5

208.4 15.7 (18.1) 206.0 7.3 416.8

210.9 15.7 8.9 235.5 6.9 482.8

213.4 15.7 41.3 270.4 6.5 550.3

213.4 15.7 41.3 270.4 6.5 550.3

223.4 15.7 173.2 412.3 4.9 810.5

233.4 15.7 298.6 547.7 3.3 1,042.8

Balance Sheet Statistics Net Total Debt/Equity Net Total Debt/Capital Net Total Debt/LTM EBITDAX EBIT Coverage ROCE Book Value Source: Company reports; M Partners estimates.

30.6% 29.9% 1.8x 0.0x -1.7% $1.99

30.9% 30.0% 1.0x 18.7x 18.0% $1.75

39.6% 43.6% 0.9x 26.5x 19.5% $1.93

31.3% 24.5% 0.6x 43.9x 37.1% $2.01

57.7% 49.3% 0.7x -58.3x -93.0% $1.73

57.7% 49.3% 0.7x 9.6x -2.9% $1.68

57.0% 46.1% 0.7x -0.5x -3.0% $1.67

57.3% 46.2% 0.8x 17.3x 14.0% $1.79

33.7% 25.3% 0.5x 44.8x 33.8% $2.01

9.3% 6.5% 0.3x 67.2x 33.8% $2.30

9.3% 6.5% 0.3x 27.9x 18.9% $2.33

-28.3% -18.0% -0.1x 105.1x 23.4% $3.50

-48.7% -28.9% -0.4x 296.4x 14.2% $4.60

APPENDIX D COASTAL STATEMENT OF CASH FLOWS

Member of the Investment Industry Regulatory Organization of Canada (IIROC) Participating Organization Toronto Stock Exchange and Toronto Venture Exchange Member Canadian Investor Protection Fund (CIPF)

David Buma 416.603.7381 ext. 240 db@mpartners.ca

COASTAL ENERGY COMPANY

August 26, 2011
Coastal Statement Of Cash Flows (2009-2013E) (Fiscal Year Ended December 31; in US$, MM unless noted otherwise) Operating Activities Earnings Attributable to Coastal Earnings Distributions from Apico Non-Cash Items: Share of Earnings from Apico Non-controlling Interest Unrealized Loss on Derivative Instruments Depreciation & Amortization Future Income Taxes Exploration Expense Special Items Other Operating Cash Flow Decrease (Increase) in Non-Cash Working Capital Cash Provided By Operating Activities Investing Activities Business Acquisition/Disposition Capital Expenditures Other Assets Cash Provided By (Used In) Investing Activities Financing Activities Proceeds of Long-Term Debt Repayments Of Long-Term Debt Common Stock Issuance Other Cash (Used In) Provided By Financing Activities Effect of FX on Cash & Cash Equivalents Net Increase (Decrease) In Cash Cash At Beginning Of Period Cash At End Of Period 2009 Q1/10 Q2/10 Q3/10 Q4/10 2010 Q1/11 Q2/11 Q3/11E Q4/11E 2011E 2012E 2013E

(0.1) 8.1 (8.5) (0.1) 2.0 23.7 0.7 0.0 1.8 9.4 36.9 17.1 54.0

11.6 0.5 (3.0) (0.0) 0.1 6.0 5.6 9.3 0.0 1.1 31.1 (5.7) 25.5

12.5 3.6 (3.2) 0.1 0.0 3.7 13.6 0.1 0.0 2.6 33.0 19.3 52.4

9.2 6.1 (2.5) (0.2) 0.0 21.4 10.7 0.0 0.0 2.4 47.2 (41.2) 5.9

(28.5) 5.6 (2.3) 1.4 16.6 25.5 (14.0) (9.4) 10.7 4.7 10.4 0.8 11.2

4.9 15.9 (11.0) 1.2 16.7 56.6 16.0 0.0 10.7 10.8 121.7 (26.8) 95.0

(2.4) 0.9 (3.3) 0.3 18.3 13.3 3.2 5.6 0.0 2.8 38.8 (7.3) 31.4

11.8 1.3 (4.3) 0.6 (7.7) 11.7 12.0 0.9 0.0 3.1 29.5 2.8 32.3

27.0 1.1 (3.9) (0.4) (0.7) 19.6 23.5 1.6 0.0 0.0 67.7 (8.1) 59.6

32.4 1.0 (3.6) (0.4) (5.6) 24.4 29.2 1.7 0.0 0.0 79.0 (8.8) 70.2

68.8 4.3 (15.1) 0.1 4.3 68.9 67.8 9.7 0.0 5.9 214.9 (21.4) 193.5

132.0 3.7 (13.4) (1.6) (3.3) 129.7 119.1 12.5 0.0 0.0 378.6 (35.4) 343.2

125.4 4.4 (15.7) (1.6) (1.0) 161.6 112.5 13.0 0.0 0.0 398.6 (37.0) 361.6

0.0 (77.7) 1.5 (76.1)

0.0 (36.3) 1.1 (35.2)

0.0 (53.5) 0.4 (53.1)

0.0 (11.0) (4.3) (15.3)

0.0 (32.5) (10.0) (42.5)

0.0 (133.4) (12.8) (146.1)

0.0 (36.5) 6.3 (30.1)

0.0 (33.4) (12.4) (45.9)

0.0 (32.1) 0.0 (32.1)

0.0 (33.0) 0.0 (33.0)

0.0 (135.0) (6.1) (141.1)

0.0 (250.0) 0.0 (250.0)

0.0 (260.0) 0.0 (260.0)

16.6 (26.1) 52.3 (5.9) 37.9 (1.0) 14.8 6.4 21.2

0.0 (5.0) 1.8 (1.8) (4.9) 0.1 (14.5) 21.2 21.2

0.0 (1.0) 0.0 (0.3) (1.2) (0.1) (2.1) 21.2 4.6

56.2 (28.6) 0.2 (3.2) 24.6 (0.0) 15.2 4.6 19.9

17.5 0.0 0.4 (2.5) 15.4 0.0 (15.9) 19.9 3.9

73.7 (34.6) 2.4 (7.7) 33.9 (0.0) (17.3) 21.2 3.9

6.3 0.0 4.7 0.0 11.0 (0.2) 12.0 3.9 15.9

0.0 0.0 0.7 (0.7) 0.0 (0.5) (14.0) 15.9 2.2

0.0 (9.1) 2.5 0.0 (6.6) 0.0 20.9 2.2 23.1

0.0 (9.1) 2.5 0.0 (6.6) 0.0 30.7 23.1 53.7

6.3 (18.2) 10.4 (1.4) (2.2) (0.7) 49.6 3.9 53.7

0.0 (16.4) 10.0 0.0 (6.4) 0.0 86.8 53.7 140.6

0.0 (7.1) 10.0 0.0 2.9 0.0 104.5 140.6 245.1

Free Cash Flow Operating Cash Flow Change In Working Capital Capital Expenditures Free Cash Flow Operating Cash Flow Per Share Free Cash Flow Per Share Diluted Shares Outstanding Source: Company reports; M Partners estimates.

36.9 17.1 (77.7) (23.7) $0.38 ($0.24) 98.2

31.1 (5.7) (36.3) (10.9) $0.27 ($0.10) 113.4

33.0 19.3 (53.5) (1.2) $0.29 ($0.01) 112.6

47.2 (41.2) (11.0) (5.1) $0.42 ($0.04) 113.2

10.4 0.8 (32.5) (21.3) $0.10 ($0.19) 109.6

121.7 (26.8) (133.4) (38.4) $1.08 ($0.34) 113.2

38.8 (7.3) (36.5) (5.0) $0.34 ($0.04) 115.3

29.5 2.8 (33.4) (1.2) $0.26 ($0.01) 115.2

67.7 (8.1) (32.1) 27.5 $0.58 $0.23 117.1

79.0 (8.8) (33.0) 37.2 $0.67 $0.32 117.3

214.9 (21.4) (135.0) 58.5 $1.85 $0.50 116.2

378.6 (35.4) (250.0) 93.2 $3.21 $0.79 118.0

398.6 (37.0) (260.0) 101.6 $3.35 $0.85 119.0

Member of the Investment Industry Regulatory Organization of Canada (IIROC) Participating Organization Toronto Stock Exchange and Toronto Venture Exchange Member Canadian Investor Protection Fund (CIPF) David Buma 416.603.7381 ext. 240 db@mpartners.ca

M|PARTNERS
Toronto Dominion Centre Canadian Pacific Tower 100 Wellington Street West Suite 2201, P.O. BOX 320 Toronto, Ontario M5K 1K2 Main line: 416-603-4343 Fax: 416603-8608 Contact Information Research Alan Breuer David Buma Marc Johnson Michael Krestell Kelsey Lobsinger Ingrid Rico John Safrance Ron Shuttleworth Tom Varesh Trading Jennifer Burke Ben Gelfand Steve Isenberg Cameron Loree Kyle Maister Jeff Maser Tommy Matthews Garett Prins Helen Spasopoulos Mark Vendramin Jeff Zicherman Advisory Christopher Dingle Richard Goodman Kelly Klatik Thomas Kofman Daniel Lee Jason Matheson Michael McIntosh Thupten Samchok ab@mpartners.ca db@mpartners.ca mj@mpartners.ca mk@mpartners.ca kl@mpartners.ca irico@mpartners.ca jsafrance@mpartners.ca rs@mpartners.ca tv@mpartners.ca

jb@mpartners.ca bg@mpartners.ca si@mpartners.ca cl@mpartners.ca km@mpartners.ca jmaser@mpartners.ca tm@mpartners.ca gp@mpartners.ca hs@mpartners.ca mv@mpartners.ca jz@mpartners.ca

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As a full-service investment bank, M Partners first priority lies in the financial satisfaction of its clients. In keeping with the firms self-imposed high standards, M Partners approach to investment is anything but standardized. Aiming to create new opportunities and ideas for clients rather than steering them towards typical investment outlets, M Partners has adopted a keen strategy of focused and relevant research. Such knowledge-driven efforts, coupled with the ample skills of the firms management, produces successful services ranging from account management to advisory engagements. M Partners received Investment Industry Regulatory Organization of Canada (IIROC) approval on April 14th 2005 and trades under broker number 97. The team currently has 23 members of varying degrees of financial experience, including principals Thomas Kofman and Steve Isenberg, who have a combined 35 years of financial experience and are well known in the field. This backbone of strong leadership will help chart the firms course into the future. In the coming months and years, M Partners will be focusing on a number of verticals, including environmental and infrastructure, real estate, mining, merchandising and consumer products, and other special situations. M Partners has strong financial backers who have extensive capital markets experience. The firm is a member of IIROC, a participating member of the Toronto Stock Exchange, The TSX Venture Exchange and the Canadian Investor Protection Fund (CIPF). M Partners does not make a market in an equity or equity related security of the subject issuer. Disclosure The particulars contained herein were obtained from sources which we believe to be reliable but are not guaranteed by us and may be incomplete. The opinions expressed are based upon our analysis and interpretation of these particulars and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. In accordance with Policy 3400 of IIROC, M Partners hereby confirms as of the date of this report:
Coastal Energy Company Does M Partners or its affiliates collectively beneficially own 1% or more of any class of equity securities of the company which is the subject of the research report. Does the analyst or any associate of the analyst responsible for the report or public comment hold shares in the company.

No No

Has M Partners or a director or officer of M Partners or any analyst provided services to the company for remuneration other than normal investment advisory or trade execution services within the preceeding 12 months, (may seek compensation for investment banking services from the company herein within the next 3 months). Is any director, officer, employee or research analyst an officer, director or employee of the company, or serves in an advisory capacity to the company. Has the analyst has viewed the material operations of the company. We define material operations as an issuer's corporate head office and its main production facility or a satellite facility that is representitive of the company's operations. Did M Partners provide investment banking services for the company during the 12 months preceding the publication of the research report? Has the analyst preparing the report received compensation based upon M Partners investment banking reveneus for this issuer?

No

No

No No No

Dissemination All final research reports are disseminated to institutional clients of M Partners simultaneously in electronic form. Hard copies will be disseminated to any client that has requested to be on the distribution list of M Partners. Reproduction of this report in whole or in part without permission is prohibited. Research Analysts The Research Analyst(s) who prepare this report certify that their respective report accurately reflects his/her personal opinion and that no part of his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views as to the securities or companies. M Partners compensates its research analysts from a variety of sources and research analysts may or may not receive compensation based upon M Partners investment banking revenue. Rating System Buy: price expected to rise Sell: price is inflated and expected to decrease Hold: properly priced Speculative Buy: price expected to rise; material risk to the investment exists Under review: not currently rated
Summary of Recommendations As of June 30, 2011 Buy Sell Hold Total 40 1 1 42 95% 2% 2% 100%

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