UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

(Mark One)
[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended                 December 31, 1998                  
                          ---------------------------------------------------

                                       OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from _________________ to _________________

Commission file Number         1-4668          

                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
             (Exact name of registrant as specified in its charter)

              BERMUDA                                                NONE
State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization                                Identification No.)

   Clarendon House
   Church Street
   Hamilton, Bermuda  HM DX                                          NONE
(Address of principal executive offices)                          (Zip Code)

Registrant's telephone number, including area code              (441) 295-1422

Securities registered pursuant to Section 12(b) of the Act:

                                                        Name of each exchange on
        Title of each class                                 which registered

Common Stock, par value $.12 per share                    Boston Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  NONE



<PAGE>


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
                                                        |X|   Yes      |_|    No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained,  to the best of registrant's knowledge, in definitive proxy or
information  statements  incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.                                          [X]

The  aggregate  market value of the common stock held by  non-affiliates  of the
registrant was approximately $43,000,000 (U.S.) at January 29, 1999.

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date:

Common stock,  par value $.12 per share,  40,056,358  shares  outstanding  as of
January 29, 1999.

                       DOCUMENTS INCORPORATED BY REFERENCE

Proxy statement of Coastal Caribbean Oils & Minerals, Ltd. related to the Annual
Meeting of  Shareholders  for the fiscal year ended December 31, 1998,  which is
incorporated into Part III of this Form 10-K.


<PAGE>


                                TABLE OF CONTENTS

                                                                            Page

                                     PART I

Item 1.  Business                                                             4

Item 2.  Properties                                                           9

Item 3.  Legal Proceedings                                                   13

Item 4.  Submission of Matters to a Vote of Security Holders                 16

                                     PART II

Item 5.  Market for the Company's Common Stock and Related
         Stockholder Matters                                                 17

Item 6.  Selected Consolidated Financial Information                         19

Item 7.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                           20

Item 7A. Quantitative and Qualitative Disclosures About Market Risk          22

Item 8.  Financial Statements and Supplementary Data                         23

Item 9.  Changes in and Disagreements with Accountants on
         Accounting and Financial Disclosure                                 39

                                    PART III

Item 10. Directors and Executive Officers of the Company                     39

Item 11. Executive Compensation                                              39

Item 12. Security Ownership of Certain Beneficial Owners and Management      39

Item 13. Certain Relationships and Related Transactions                      39

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K     40

---------------------------

All monetary figures set forth are expressed in United States currency.



<PAGE>


                                     PART I

Item 1.  Business

         (a)      General Development of Business.

                  Coastal  Caribbean  Oils & Minerals,  Ltd.  (the  "Company" or
"Coastal  Caribbean"),  a Bermuda  corporation,  is engaged through its majority
owned  subsidiary in the exploration  for oil and gas reserves.  At December 31,
1998, Coastal Caribbean's principal asset was its subsidiary,  Coastal Petroleum
Company  ("Coastal  Petroleum").  Coastal  Petroleum's  principal assets are its
nonproducing  oil, gas and mineral leases and royalty  interests in the State of
Florida.  Coastal  Petroleum  has made no  commercial  discoveries  on the lands
covered by these leases.

                  Coastal  Petroleum is the lessee under State of Florida leases
relating to the  exploration  for and  production  of oil,  gas and  minerals on
approximately  3,700,000 acres of submerged lands along the Gulf Coast and under
certain inland lakes and rivers.  The leases  provide for a working  interest in
approximately  1,250,000 acres and a royalty interest in approximately 2,450,000
acres  covered  by  the  leases.   Coastal  Petroleum  has  made  no  commercial
discoveries on its leaseholds.

                  In  1990,  the  State  of  Florida  enacted  legislation  that
prohibits  drilling or exploration for oil or gas on Florida's offshore acreage.
The law does not apply to areas where  Coastal  Petroleum is entitled to conduct
exploration.  However, in those areas where Coastal Petroleum has only a royalty
interest,  presently the law  effectively  prohibits  production of oil and gas,
rendering it impossible  for Coastal  Petroleum to collect  royalties from those
areas.  During  1998,  Coastal  Petroleum  exhausted  its legal  remedies in its
efforts to obtain  compensation  for the  drilling  prohibition  on its  royalty
interest acreage.

                  Coastal  Petroleum has been  involved in various  lawsuits for
many years. Currently, Coastal Petroleum is a party to two actions (the "Florida
Litigation")  in which two basic  claims are being  contested:  whether  Coastal
Petroleum may obtain an oil and gas  exploration  drilling permit and the amount
of the required  surety in connection  with any drilling.  In addition,  Coastal
Caribbean is a party to one additional  action in which Coastal Caribbean claims
that certain of its royalty interests have been confiscated by the State. During
1998, the Company  actively pursued the Florida  Litigation.  See Item 3. "Legal
Proceedings" for a more complete discussion of the litigation.

                  In 1998,  Coastal  Petroleum  continued  its efforts to obtain
permits to drill oil and gas exploration wells on its leases.

                  On April 8, 1998,  a Florida Administrative Judge  recommended
that Coastal Petroleum was entitled to a drilling permit with the requirement of
a  $225  million  surety.  On  May  13,  1998,  the  Administration   Commission
("Commission")  of the State of Florida  rejected  the $225  million  surety and
remanded the proceedings to the  Administrative  Law Judge with  instructions to
recalculate the surety amount.


<PAGE>

                  On May  26,  1998,  the Florida  Department  of  Environmental
Protection  ("DEP")  refused to issue a permit to Coastal  Petroleum to drill an
offshore exploration well near St. George's Island.

                  Coastal Petroleum has  appealed both the denial  of the permit
by the DEP and the imposition of the surety to Florida's First District Court of
Appeal  ("Court of  Appeal").  All of the briefs in the case have been filed and
the Company expects that oral argument will be scheduled in the near future.

         (b)      Financial Information About Industry Segments.

                  Because the Company is engaged in only one  industry,  namely,
oil, gas and mineral exploration and development, this item is not applicable to
the  Company.  See  Item 8 for  general  financial  information  concerning  the
Company.

         (c)      Narrative Description of the Business.

                  Coastal  Caribbean was organized by a special  enabling act of
the Bermuda Legislature passed on January 15, 1962 which permitted the filing of
a Memorandum of  Association  on February 14, 1962. The Company is the successor
to Coastal Caribbean Oils, Inc., a Panamanian  corporation  organized on January
31, 1953 to be the holding company for Coastal Petroleum Company.

                  Coastal Petroleum caused oil and gas exploration to take place
on its leases prior to the onset of litigation  in 1968 and has  conducted  more
limited  exploration since 1968 until 1996 which has been sufficient to meet the
drilling requirements under the leases. In 1996, the Company initiated a program
to  identify   potential  drilling  prospects  which  continued  into  1998.  No
commercial oil or gas discoveries have been made on these properties; therefore,
the Company has no proved reserves of oil and gas and has had no production. See
"Item 2. "Properties."

                  (i)      Principal Products.

                           Not applicable.

                  (ii)     Status of Product or Segment.

                           Not applicable.


                  (iii)    Raw Materials.

                           Not applicable.



<PAGE>


                  (iv)     Patents, Licenses, Franchises and Concessions Held.

                           See Item 2. "Properties."

                           The  acreage  covered  by  the  Company's  leases  is
located for the most part along  offshore areas on the Gulf Coast of Florida and
in submerged and  unsubmerged  lands under certain bays,  inlets,  riverbeds and
lakes,  of which  Lake  Okeechobee  is the  largest.  See  Item 2. The  drilling
requirements and annual lease rental  obligations had been suspended by order of
the  Circuit  Court of the Second  Judicial  District in Leon  County;  however,
Coastal  Petroleum  resumed the payment of annual lease rentals ($59,247) during
July 1998.

                  (v)      Seasonality of Business.

                           The Company's business is not seasonal.

                  (vi)     Working Capital Items.

                           The  majority of the  Company's current assets are in
the form of cash and cash  equivalents.  See Item 8.  "Financial  Statements and
Supplementary Data."

                  (vii)    Customers.

                           Not applicable.

                  (viii)   Backlog.

                           Not applicable.

                  (ix)     Renegotiation  of Profits or Termination of Contracts
                           or Contract or  Subcontracts  at the  Election of the
                           Government.

                           Not applicable.

                  (x)      Competitive Conditions in the Business.

                           Competition  in the oil and gas  industry is intense.
The  Company  must  compete  with  companies  which have  substantially  greater
resources  available to them. In addition,  the industry as a whole must compete
with other  industries in supplying the energy needs of commerce and the general
public.  Furthermore,  competitive  conditions may be substantially  affected by
energy legislation which may be adopted from time to time. It is not possible to
predict the nature of any such  legislation  which may  ultimately be adopted or
its effects upon the future operations of the Company.



<PAGE>


                  (xi)     Research and Development.

                           Not applicable.

                  (xii)    Environmental Regulation.

                           The  operations of Coastal Caribbean and its right to
obtain  interests in and hold properties or to do business may be affected to an
unpredictable  extent by limitations  imposed by the laws and regulations  which
are now in effect  or which may be  adopted  by the  jurisdictions  in which the
Company carries on business. Further measures that have been or might be imposed
include  increased  bond  requirements,  conservation,  proration,  curtailment,
cessation or other forms of limiting or controlling  production of  hydrocarbons
or  minerals,   as  well  as  price  controls  or  rationing  or  other  similar
restrictions. In particular,  environmental control and energy conservation laws
and regulations  adopted by federal,  state and local authorities may have to be
complied  with  by   leaseholders   such  as  Coastal   Petroleum  (see  Florida
Litigation). It is not possible to predict the nature of any further legislation
or  regulation  that might  ultimately be adopted or its effects upon the future
operations of Coastal Caribbean or Coastal Petroleum.

                  (xiii)   Number of Persons Employed by Registrant.

                           The  Company  currently  has  three  employees.   The
Company  relies  heavily on consultants  for legal,  accounting,  geological and
administrative  services.  The Company uses consultants  because it is more cost
effective than employing a larger full time staff.

         (d)      Financial Information About Foreign and Domestic Operations
                  and Export Sales.

                  (1)      Identifiable Assets.

                           All of the Company's assets are located in the United
States. See Item 1(a) "General Development of Business."

                           Since the Company is a development stage company, the
balance of the  information  required  under this paragraph is not applicable to
the Company. See Item 8.

                  (2)      Risks Attendant to Foreign Operations.

                           Not applicable.

                  (3)      Data  which  are not  Indicative of Current or Future
                           Operations.

                           Not applicable.


<PAGE>










The following  graphic  presentation  has been  omitted,  but the following is a
description of the omitted material:



             Map showing Coastal Lease Areas in the State of Florida



<PAGE>


Item 2.  Properties

Properties

         Coastal  Petroleum,  a  Florida  corporation,   holds  certain  working
interests in  nonproducing  oil, gas and mineral leases  covering  approximately
1,250,000 acres, and a royalty interest in approximately 2,450,000 acres, in and
offshore the State of Florida.  No commercial oil or gas  discoveries  have been
made on the  properties  covered by these  leases and Coastal  Petroleum  has no
proved reserves of oil or gas and has had no significant production.

         Coastal  Petroleum  caused oil and gas exploration to take place on its
leases prior to the onset of litigation  in 1968 and had conducted  more limited
exploration  until 1996.  In 1996,  the Company  initiated a program to identify
potential drilling projects.  The amount of exploration  expenditures during the
years 1998,  1997 and 1996 was $371,000,  $504,000 and  $282,000,  respectively.
Coastal Petroleum believes all drilling and exploration  obligations  imposed by
Coastal Petroleum leases have been satisfied to date.

         In 1941, Arnold Oil Explorations, Inc., later renamed Coastal Petroleum
Company in 1947,  entered  into a contract  with the  Trustees  of the  Internal
Improvement Trust Fund of the State of Florida (the  "Trustees"),  in whom title
to publicly owned lands in the State of Florida,  including  bottoms of salt and
fresh  waters,  is  irrevocably  vested,  for the  exploration  of oil,  gas and
minerals on such lands.  Pursuant  to an option to lease in this  contract,  the
Trustees and Coastal  Petroleum entered into three leases between 1944 and 1946.
The acreage  covered by these leases is located for the most part along offshore
areas on the Gulf Coast of Florida and in submerged  lands under  certain  bays,
inlets, riverbeds and lakes, of which Lake Okeechobee is the largest.

         In 1968, Coastal Petroleum sued the Secretary of the Army of the United
States in a dispute  regarding  certain mineral rights. In 1969, as part of that
litigation,  the  Trustees  claimed  that the leases  were  invalid and had been
forfeited.  Coastal  Petroleum and the Trustees  settled their  disagreement  in
1976.

         Under the terms of the 1976 settlement agreement, the two leases (224-A
and 224-B) bordering the Gulf Coast were divided into three areas,  each running
the entire length of the coastline from Apalachicola Bay to the Naples area: (1)
The inner area,  including rivers,  bays, and harbors,  extends seaward from the
Florida shoreline a distance of 4.36 statute miles (5,280 feet per statute mile)
into the Gulf,  covers  approximately  2.25 million  acres,  and is subject to a
royalty interest payable to Coastal Petroleum. This interest is a 6 1/4% royalty
on the  wellhead  value of all oil and gas,  25  cents  per long ton on  sulfur,
receivable in cash or in kind at Coastal Petroleum's option, and a 5% royalty on
production  or the market value of other  minerals.  (2) The middle area,  three
statute miles wide and covering more than 800,000 acres, was released by Coastal
Petroleum to the Trustees,  and Coastal Petroleum has no further interest in the
area.  (3)  Coastal  Petroleum  presently  owns a 100%  working  interest in the


<PAGE>

outside  area,  which  extends  seaward an  additional  three  statute miles and
borders federal offshore acreage.  This area,  exceeding 800,000 acres,  remains
subject to royalties  payable to the State of Florida of 12 1/2% on oil and gas,
$.50 per long ton of sulfur and 10% on other minerals.  The Florida  legislature
has enacted statutes designed to protect the Big Bend Seagrass Aquatic Preserve,
an area  covering  approximately  one  quarter  of Coastal  Petroleum's  working
interest area.  However,  the legislation and legislative  history recognize and
preserve Coastal Petroleum's prior rights as granted by the leases.

         Coastal  Petroleum retains a 100% working interest in 450,000 acre Lake
Okeechobee  which is a part of Lease 248 and which is also  subject to royalties
payable to the State of Florida of 12 1/2% on oil and gas,  $.50 per long ton of
sulfur and 10% on other  minerals.  Pursuant to its settlement with the State of
Florida in 1976, Coastal Petroleum agreed not to conduct  exploration,  drilling
or mining operations on Lake Okeechobee without the prior approval of the State.
As to the balance of this lease,  covering  approximately 200,000 acres, Coastal
Petroleum  retains royalty  interests of 6 1/4% on oil, gas and sulfur and 5% on
other minerals.

         Under the 1976 settlement agreement with the Trustees, the three leases
have a term of 40 years  beginning  from January 6, 1976 and require the payment
of an annual  rental of $59,247;  if oil, gas or minerals are being  produced in
economically sustainable quantities at January 6, 2016, these operations will be
allowed to  continue  until they  become  uneconomic.  Further,  the  settlement
agreement  provides that the drilling  requirements shall be governed by Chapter
20680, Laws of Florida,  Acts of 1941, and that all other drilling  requirements
are waived.  Under the 1941 Act, a lessee is required to drill at least one test
well on lands  leased  in each  five year  period  under the term of the  lease.
Coastal   Petroleum   believes  it  is  current  in   fulfilling   its  drilling
requirements.  The  Court  in  the  Florida  Litigation  had  suspended  Coastal
Petroleum's  obligations,  pending the outcome of that  litigation.  During July
1998, the payment of lease rentals was resumed.

         In 1992 Coastal Petroleum was granted an additional  geophysical permit
for seismic,  gravity and magnetic work, on its offshore leases.  Magnetics were
run on a large  portion of 224-A.  Work was  suspended  for a few months and the
Department of Natural  Resources  ruled that a new permit  application  would be
required  to  renew  operations.  Coastal  Petroleum's  new  application  for  a
geophysical  permit  received  approval in January  1997.  The Company began the
magnetic  work  during  January  1998  and  subsequently  filed  for a one  year
extension of time to complete  the work.  During  1998,  the Company  decided to
purchase  the data  because  it was more  cost  effective  than  completing  the
magnetic work.

         See Item 3.  "Legal  Proceedings" for a discussion of the impact of the
current status of the Florida Litigation on exploration activities.



<PAGE>


         The following charts reflect the acreage and annual rental  obligations
resulting  from  the  1976  settlement  agreement  with  the  Trustees  and  the
approximate acreage under lease at December 31, 1998:

                            Current                Current               Current
                            Working                Royalty               Annual
Lease                       Interest               Interest              Rental
-----                      ---------              ---------              -------
224-A and 224-B              800,000              2,250,000              $39,261
248                          450,000                200,000               19,986
                           ---------              ---------              -------
                           1,250,000              2,450,000              $59,247
                           =========              =========              =======
                       
                    Acreage under lease at December 31, 1998

                             Gross Acres (*)                 Net Acres (**)
                       -------------------------       -------------------------
                       Undeveloped     Developed       Undeveloped     Developed
                       -----------     ---------       -----------     ---------
Working interest        1,250,000         -0-           1,250,000         -0-
Royalty interest        2,450,000         -0-             153,125         -0- 
                        ---------        -----          ---------        -----
    Total               3,700,000         -0-           1,403,125         -0-   
                        =========      =========        =========      =========
                                           
*        A gross acre is an acre in which a working interest is owned.
**       A net acre is  deemed  to exist  when the sum of  fractional  ownership
         working interests in gross acres equals one. The number of net acres is
         the sum of the  fractional  working  interests  owned  in  gross  acres
         expressed as whole numbers and fractions thereof.

Disclosure Concerning Oil and Gas Operations.

         Since the properties in which the Company has interests are undeveloped
and nonproducing,  items 2 through 4 of Securities Exchange Act Industry Guide 2
are not applicable.

(5)      Undeveloped Acreage.

         The  Company's  undeveloped  acreage  as of  December  31,  1998 was as
follows:

                                             Gross Acres           Net Acres
                                             -----------           ---------
          Working Interest                    1,250,000            1,250,000
          Royalty Interest                    2,450,000              153,125
                                              ---------            ---------
                                                          
          Total                               3,700,000            1,403,125
                                              =========            =========
                                                         


<PAGE>


(6)       Drilling Activity.

          No drilling  has taken  place since May 1987 when two shallow  mineral
test wells were drilled on lease 224-B.

(7)       Present Activities.

          The  Company is  continuing  its  program to  evaluate  its leases and
identify potential drilling prospects.

(8)       Delivery Commitments.

          None.

<PAGE>


Item 3.           Legal Proceedings

         Coastal Petroleum has been involved in various lawsuits for many years.
Currently, Coastal Petroleum is a party to two actions in which two basic claims
are  being  contested:  Whether  Coastal  Petroleum  may  obtain  an oil and gas
exploration  drilling permit and the amount of the required surety in connection
with any drilling.  In addition,  Coastal Caribbean is a party to another action
in which Coastal  Caribbean  claims that certain of its royalty  interests  have
been confiscated by the State.

1.       Coastal  Petroleum  Company   v.   State  Department  of  Environmental
Protection,  (Case No. 98-1998, First District Court of Appeal). Drilling Permit
Litigation.

         In  1992,  Coastal  Petroleum  applied  to the  Florida  Department  of
Environmental  Protection  (the "DEP") for a permit to drill an exploratory  oil
and gas well off Apalachicola, Florida. The proposed well would be located in an
area included within Lease 224A. The DEP subsequently denied the application for
issuance of a drilling permit for various reasons including the requirement of a
$1.9  billion  bond.  Coastal  Petroleum  appealed the actions of the DEP to the
Florida First District Court of Appeal ("Court of Appeal").  After two decisions
by the Court of Appeal in favor of Coastal Petroleum,  the Florida Supreme Court
in July 1996  denied the DEP's  petition to review an April 1996 Court of Appeal
decision.  The Florida Supreme Court had also refused to review an earlier Court
of Appeal decision.

         On August 16, 1996,  the DEP  notified  Coastal  Petroleum  that it was
prepared to issue the drilling permit subject to Coastal Petroleum  publishing a
Notice of Intent to Issue ("Notice") the permit.  The Notice allowed  interested
parties to request administrative hearings on the permit.

         On May 28, 1997,  the Oil and Gas Drilling  Bill (SB550) was enacted in
Florida.  The  legislation  requires  that a  surety  will  now be  based on the
projected  cleanup costs and possible  natural  resource damage  associated with
offshore   drilling  as  estimated  by  the  DEP  and  as   established  by  the
Administration  Commission (the "Commission") which is comprised of the Governor
and  Cabinet.  Previously,  the  required  surety was  satisfied by a payment of
$4,000 to the Mineral Trust Fund in the first year,  with a maximum  $30,000 per
year and a payment of $1,500 per well for each subsequent  year. On September 9,
1997,  the  State of  Florida  set a new  surety  amount of $4.25  billion  as a
precondition for the issuance of the drilling permit.



<PAGE>


         During  1997,  the Company  published  a Notice of the DEP's  intent to
issue  the  permit.  On  October  20,  1997,  a  public  hearing  on the  permit
application convened and concluded on November 6, 1997. The hearing included the
Company's  appeal of the $4.25 billion surety  requirement.  On April 8, 1998, a
Florida Administrative Law Judge recommended that Coastal Petroleum was entitled
to a drilling permit with the  requirement of a $225 million surety.  On May 13,
1998,  the  Commission  rejected  the  $225  million  surety  and  remanded  the
proceedings to the Administrative Law Judge with instructions to recalculate the
surety amount.

         On May 26, 1998, the DEP refused to issue a permit to Coastal Petroleum
to drill an offshore exploration well near St. George's Island.

         Coastal Petroleum has appealed both the denial of the permit by the DEP
and the  imposition  of the surety to the Court of Appeal.  All of the briefs in
the case have been filed and the  Company  expects  that oral  argument  will be
scheduled in the near future.

2.       Coastal  Petroleum  Company   v.  State  of   Florida,   Department  of
Environmental Protection (DOAH Case Nos. 98-1901-1912). 12 Permit Applications.

         On February 25, 1997,  Coastal  Petroleum filed 12 permit  applications
with the DEP which were denied by the  Department  on March 24, 1998.  On August
31, 1998,  the State of Florida  Division of  Administrative  Hearings  issued a
Notice of Hearing to review the Department's denial of the permit  applications.
The hearing was held on January 4-8,  1999.  The parties are awaiting a decision
by the Administrative Law Judge which is expected during March 1999.

3.       Cottingham  v. State of  Florida, (Case No. 94-768-CA-01, Circuit Court
of the  Second  Judicial  Circuit in Leon  County).  Coastal  Caribbean  Royalty
Litigation.

         The  offshore  areas  covered by Coastal  Petroleum's  original  leases
(prior to the 1976  Settlement  Agreement)  are subject to certain other royalty
interests held by third parties,  including Coastal Caribbean.  Several of those
third parties,  including Coastal Caribbean,  have instituted a separate lawsuit
against the State.  That lawsuit  claims that their royalty  interests have been
confiscated as a result of the State's actions discussed above and that they are
entitled to compensation for that taking.

         The royalty holders were not parties to the 1976 Settlement  Agreement,
and the State's argument that the terms of the Settlement  Agreement insulate it
from  taking  claims  does  not  apply  to those  royalty  holders.  The case is
currently pending before the Circuit Court in Tallahassee.

         Any recovery made in the royalty holder's lawsuit would be shared among
the various  plaintiffs in that lawsuit,  including Coastal  Caribbean.  Coastal
Petroleum would not share in any such recovery.


<PAGE>


Counsel

         Mr. Robert J. Angerer of Tallahassee,  Florida  is Coastal  Petroleum's
trial counsel in the Florida Litigation.  Mr. Angerer,  age 52, is a graduate of
the University of Michigan  (B.S.E.  1969) and received his law degree with high
honors from Florida State University in 1974.

Fee Arrangements

         In connection with the Florida  Litigation against the State of Florida
described  herein,  Coastal  Petroleum has agreed to pay the following firms, in
addition to their  charges on a time spent  basis,  a total of 6% in  contingent
fees based upon any net recovery from execution on or  satisfaction  of judgment
or from settlement of such lawsuit as follows:

                                                        Percent of net recovery
                  Robert J. Angerer                               1.5
                  Other counsel                                   4.5
                                                                  ---
                  Total                                           6.0
                                                                  ===

         Coastal  Petroleum has also assigned  3.4% of net  recoveries  from the
Florida Litigation to its officers and others.

Uncertainty

         No assurances can be given that Coastal  Petroleum or Coastal Caribbean
will  prevail  on any of the  issues  set forth  above,  that they will  recover
compensation for any of their claims, or that a drilling permit will be granted.
In  addition,  even if  Coastal  Petroleum  were to prevail on any or all of the
issues to be  decided,  no  assurance  can be given that  Coastal  Caribbean  or
Coastal Petroleum will have sufficient financial resources to survive until such
decisions  become  final or to drill any wells for which  permits are  received.
There is also no assurance that any wells drilled will be successful and lead to
production of any oil or gas in commercial quantities.


<PAGE>


Item 4.           Submission of Matters to a Vote of Security Holders

                  None.

Executive Officers of the Company.

          The following  information  with respect to the executive  officers of
the Company is furnished  pursuant to Instruction 3 to Item 401(b) of Regulation
S-K.

<TABLE>
<CAPTION>
                                                                                       Other Positions
                                   Office           Length of Service                   Held With The
          Name         Age          Held              as an Officer                       Company      

<S>                    <C>     <C>                 <C>                    <C>  
Benjamin W. Heath      84         President           Since 1953          Director
Phillip W. Ware        49      Vice President         Since 1982          Director, President of Coastal Petroleum

James R. Joyce         58     Treasurer, Asst.        Since 1994          Secretary-Treasurer of Coastal Petroleum
                             Secretary and Chief
                              Financial Officer
</TABLE>

         All  officers  of the  Company  are  elected  annually  by the Board of
Directors and serve at the pleasure of the Board of Directors.

         The Company is not aware of any arrangements or understandings  between
any of the  individuals  named  and any  other  person  pursuant  to  which  any
individual named above was selected as an officer.



<PAGE>


                                     PART II

Item 5.           Market for the Company's Common Stock and Related
                  Stockholder Matters

         (a)      Market Information.

                  The  principal  market for the  Company's  common stock is the
Boston  Stock  Exchange.  The  quarterly  high and low  closing  prices  on that
exchange during the last two years were as follows:

--------------------------------------------------------------------------------

1998        1st quarter        2nd quarter        3rd quarter        4th quarter
----        -----------        -----------        -----------        -----------
                                                                  
High           2 7/8              3 1/2             1 13/16             1 9/16
Low            1 1/2              1 9/16               1                1 1/16
--------------------------------------------------------------------------------
                                                                  
1997        1st quarter        2nd quarter        3rd quarter        4th quarter
----        -----------        -----------        -----------        -----------
                                                                  
High           4 3/4              2 1/2              2 1/8              2 3/8
Low            2 1/16             1 9/16             1 7/16             1 5/8
--------------------------------------------------------------------------------

         (b)      Holders.

                  The  approximate  number of record  holders  of the  Company's
common stock at January 29, 1999 was approximately 12,600.

         (c)      Dividends.

                  The Company has never paid a dividend on its capital stock and
will be unable to do so until its deficit, ($26,256,000 at December 31, 1998) is
eliminated.

                  The Company's  Memorandum of  Association  and Bye-Laws do not
permit the Company to repurchase or redeem shares of its common stock.

         (d)      Recent Sales of Unregistered Securities.

                  None.


<PAGE>


         Foreign Exchange Control Regulations

                  The Company is subject to the  applicable  laws of The Islands
of Bermuda relating to exchange  control,  but has the permission of the Foreign
Exchange  Control of Bermuda to carry on business  in, to receive,  disburse and
hold United States  dollars and dollar  securities  under its  designation as an
External  Account  Company.  The Company has been  advised  that,  although as a
matter of law it is possible for such designation to be revoked, there is little
precedent for revocation under Bermuda law.

         Taxes

                  Coastal Caribbean is a Bermuda corporation.  Bermuda currently
imposes  no taxes on  corporate  income or  capital  gains  realized  outside of
Bermuda. Any amounts received by Coastal Caribbean from United States sources as
dividends,  interest,  or other fixed or determinable  annual or periodic gains,
profits and income,  will be subject to a 30% United States  withholding tax. In
addition,  any dividends from its domestic subsidiary,  Coastal Petroleum,  will
not be eligible for the 100% dividends received deduction, which is allowable in
the case of a United  States parent  corporation.  Shares of the Company held by
persons  who are  citizens  or  residents  of the United  States are  subject to
federal estate and gift and local inheritance  taxation.  Any dividends received
by such  persons  will also be  subject  to  federal,  State  and  local  income
taxation.  The foregoing rules are of general  application only, and reflect law
in force as of the date of this report.

                  A convention between Bermuda and the United States relating to
mutual assistance on tax matters became operative in 1988.



<PAGE>


Item 6.           Selected Consolidated Financial Information

         The  following  selected  consolidated  financial  information  for the
Company  insofar as it  relates  to each of the five  years in the period  ended
December 31, 1998 has been extracted from the Company's  consolidated  financial
statements.



<TABLE>
<CAPTION>
                                            1998            1997             1996              1995            1994
                                             ($)             ($)              ($)               ($)             ($)
                                     
<S>                                      <C>             <C>              <C>                <C>             <C>      
Net loss                                 (1,155,000)     (1,611,000)      (1,148,000)        (880,000)       (719,000)
                                         ===========     ===========      ===========        =========       =========
                                     
Net loss per share                   
(Basic and Diluted)                                                                                     
                                               (.03)           (.04)            (.03)            (.03)           (.02)
                                         ===========     ===========      ===========       ==========      ==========
                                    
Cash and securities available             2,181,000       3,749,000        5,789,000          308,000         648,000
                                          =========       =========        =========        =========       =========

Cost associated with leasehold
  interests in oil, gas and
  mineral properties (unproved)           4,735,619       4,395,000        3,944,000        3,689,000       3,689,000
                                          =========       =========        =========        =========       =========

Total assets                              7,311,050       8,462,000       10,021,000        4,128,000       4,375,000
                                          =========       =========       ==========        =========       =========

Shareholders' equity:
  Common stock                            4,807,000       4,807,000        4,805,000        4,004,000       4,004,000
  Capital in excess                      28,693,000      28,693,000       28,443,000       22,395,000      21,795,000
  Accumulated deficit                   (26,256,000)    (25,102,000)     (23,490,000)     (22,342,000)    (21,463,000)
                                        ------------    ------------     ------------     ------------    ------------
Total shareholders' equity                7,244,000       8,398,000        9,758,000        4,057,000       4,336,000
                                          =========       =========        =========        =========       =========
</TABLE>



<PAGE>


Item 7.           Management's Discussion and Analysis of Financial Condition
                  and Results of Operations

(1)      Liquidity and Capital Resources

                              Short Term Liquidity

         At December 31 1998,  Coastal Caribbean had approximately  $2.2 million
of cash and  securities  available.  These  funds  are  expected  to be used for
general  corporate  purposes,  including  exploration  and  development  and  to
continue the litigation against the State of Florida.

                               Long Term Liquidity

         The Company estimates that as much as $400,000 per year may be required
in connection with the Florida litigation.  The Company expects that the Florida
litigation  will  continue at least  through  1999,  although the State may take
actions that could  shorten or lengthen  that period.  During 1998,  the Company
spent  approximately  $371,000  under a program to identify  potential  drilling
prospects. The amount of 1999 capital expenditures will depend on the outcome of
the Florida litigation.

         The  Company's  oil and  gas  properties  are  currently  unproved  and
undeveloped.  The Company  has  applied for a drilling  permit from the State of
Florida to drill an  exploratory  well (the St. George  Island  prospect) in the
water near Apalachicola, Florida. The State of Florida has resisted the issuance
of a drilling permit. If the Company is successful in obtaining a state drilling
permit, then the Company must also do the following:

         1.       Obtain a federal drilling permit.

         2.       Finance  drilling  of the  well  (including  the  cost  of the
                  recommended surety),  which is estimated to cost approximately
                  $5.5 million.

         3.       Begin drilling the well within one year  of the date the state
                  permit is issued.

         In 1997,  the Company  filed 12  additional  applications  for drilling
permits. The Company has objected to certain requests for additional data by the
State of Florida DEP and the Company has petitioned for a formal  administrative
hearing to resolve the dispute which was held during  January 1999.  The parties
are awaiting a decision by the Administrative Law Judge.

         The Company does not currently  have assets  sufficient to fund all the
expenditures  necessary to drill the St.  George  Island  prospect and any other
exploration  wells,  if all of the permits  were  granted.  If oil and/or gas is
discovered  in  commercial  quantities,   a  production  program  would  require
additional  permitting  and  construction  of  production,  storage and delivery
systems.  The Company would be required to seek additional financing or partners
to fund these expenditures.


<PAGE>


         The Company has  assessed its Year 2000  readiness  and it is currently
compliant.  The Year 2000 change should have no material impact on the Company's
internal operations or financial results. However, the Company will be dependent
on its  suppliers  and  potential  partners  to make  their  systems  Year  2000
compliant.  Due to the limited nature of the Company's current  operations,  the
inability of suppliers or potential  partners to be Year 2000 compliant will not
have a material impact on the Company.

(2)      Results of Operations

         The Company has never had  substantial  revenues  and has operated at a
loss each year since its  inception  in 1953.  The Company has been  involved in
litigation  since  1968 and its total  legal  expenses  have been  approximately
$2,279,000  during the three years ended  December 31, 1998.  The legal expenses
incurred related primarily to the Florida  Litigation.  The Company expects that
the  litigation  related  fees  will  be  approximately   $400,000  in  1999.  A
termination  date of this  litigation  cannot be predicted with any certainty at
this time.

1998 vs. 1997

         The Company recorded a loss of $1,155,000 for 1998,  compared to a loss
of $1,611,000 in 1997.

         Interest income and other income decreased 40% to $167,000 in 1998 from
$279,000 in 1997 because less funds were  available for  investment  during 1998
and interest rates were lower.

         Legal fees and costs  decreased  52% in 1998 to  $502,000  compared  to
$1,047,000 in the prior year. In 1997,  the Company had been involved in various
appeals and hearings in connection  with the  opposition by the state and others
to the issuance of a drilling  permit and the taking claim regarding its royalty
interest acreage. During 1998, the level of legal activity decreased.

         Administrative  expenses  increased 11% in 1998 to $495,000 compared to
$448,000 in 1997.  The primary  reason for the  increase  was an increase in the
amount of directors' and officers' liability insurance in 1998.

         Shareholder  communications  decreased  29%  from  $188,000  in 1997 to
$133,000 in 1998. In 1997,  the cost of printing and mailing was higher  because
of the size of the documents and the number of mailings compared to 1998.

         Exploration  costs decreased from $53,000 in 1997 to $31,000 in 1998 in
connection with the Company's program to identify potential drilling  prospects.
These  miscellaneous   exploration  expenses  do  not  include  the  exploration
expenditures totaling $340,000 that were capitalized in 1998 ($452,000 in 1997).


<PAGE>


1997 vs. 1996

         The Company recorded a loss of $1,611,000 for 1997,  compared to a loss
of $1,148,000 in 1996.

         Interest income  and other  income  increased  to $279,000 in 1997 from
$192,000 in 1996 due to the funds  available  for  investment  from the May 1996
rights offering to shareholders.

         Legal fees and costs  increased 43% in 1997 to  $1,047,000  compared to
$731,000 in the prior year. These costs increased due to (1) the various appeals
filed in connection with the State of Florida's  opposition to the issuance of a
drilling permit,  (2) the appeal of the adverse decision that there has not been
a  taking  of  the  Company's  royalty  interests,  and  (3)  the  October  1997
administrative hearing regarding the issuance of the pending drilling permit.

         Administrative  expenses  increased 32% in 1997 to $448,000 compared to
$339,000 in 1996. The primary reason for the increase is the first time purchase
of directors' and officers'  liability  insurance in 1996 and an increase in the
amount of coverage in 1997 ($75,000). In addition,  directors' fees increased by
$19,000 in 1997.

         Shareholder  communications  increased  101%  from  $94,000  in 1996 to
$188,000 in 1997. In 1996,  the Company saved the cost of printing and mailing a
separate annual report by utilizing the May 1996 rights  offering  prospectus in
lieu of an annual  report.  In  addition,  the cost of printing and mailing also
increased  in 1997  because  of the  size of the  documents  and the  number  of
mailings.  In 1997, the Company also mailed a special report to shareholders.

         Exploration  costs increased from $27,000 in 1996 to $53,000 in 1997 in
connection with the Company's program to identify potential drilling  prospects.
These expenses do not include the  exploration  expenditures  totaling  $504,000
that were capitalized.

Item 7A.          Quantitative and Qualitative Disclosure About Market Risk

         The Company  does not have any  significant  exposure to market risk as
the only market risk  sensitive  instruments  are its  investments in marketable
securities.  At December 31, 1998,  the carrying value of such  investments  was
approximately  $2,129,000,  the fair value was $2,135,000 and the face value was
$2,150,000.  Since the Company expects to hold the investments to maturity,  the
maturity value should be realized.



<PAGE>


Item 8.           Financial Statements and Supplementary Data


                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors
Coastal Caribbean Oils & Minerals, Ltd.

We  have  audited  the  accompanying  consolidated  balance  sheets  of  Coastal
Caribbean Oils & Minerals, Ltd. (a development stage company) as of December 31,
1998 and 1997,  and the related  consolidated  statements  of  operations,  cash
flows,  and  common  stock and  capital  in excess of par value  from  inception
(January  31,  1953) to December 31, 1998 and for each of the three years in the
period  ended   December  31,  1998.   These   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Coastal
Caribbean  Oils &  Minerals,  Ltd.  at  December  31,  1998  and  1997,  and the
consolidated  results  of its  operations  and its  cash  flows  from  inception
(January  31,  1953) to December 31, 1998 and for each of the three years in the
period ended December 31, 1998, in conformity with generally accepted accounting
principles.




                                                  /s/ Ernst & Young LLP


Stamford, Connecticut
January 12, 1999



<PAGE>


                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                             (A Bermuda Corporation)
                           A Development Stage Company

                           CONSOLIDATED BALANCE SHEETS
                           (Expressed in U.S. dollars)

                                                            December 31,
                                                         1998          1997
                                                     ------------  ------------
                        ASSETS

Current assets:
  Cash and cash equivalents                          $     52,480  $    316,333
  Accounts receivable                                      52,634        77,302
  Marketable securities                                   828,839     3,433,035
  Prepaid expenses                                        314,280       213,840
                                                     ------------  ------------
          Total current assets                          1,248,233     4,040,510
                                                     ------------  ------------

Marketable securities                                   1,300,000             -
Unproved oil, gas and mineral properties (full cost
  method)                                               4,735,619     4,395,132
Other                                                      27,198        26,765
                                                     ------------  ------------
Total assets                                         $  7,311,050  $  8,462,407
                                                     ============  ============

          LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued liabilities           $     67,299  $     63,975
                                                     ------------  ------------

Minority interests                                              -             -

Shareholders' equity:
  Common stock, par value $.12 per share:
    Authorized - 250,000,000 shares
    Outstanding - 40,056,358 shares                     4,806,763     4,806,763
  Capital in excess of par value                       28,693,033    28,693,033
                                                     ------------  ------------
                                                       33,499,796    33,499,796
  Deficit accumulated during development stage        (26,256,045)  (25,101,364)
                                                     ------------  ------------
Total shareholders' equity                              7,243,751     8,398,432
                                                     ------------  ------------
Total liabilities and shareholders' equity           $  7,311,050  $  8,462,407
                                                     ============  ============

                             See accompanying notes.


<PAGE>


                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                             (A Bermuda Corporation)
                           A Development Stage Company

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                           (Expressed in U.S. Dollars)

<TABLE>
<CAPTION>
                                                                                                                          From
                                                                                                                       inception
                                                                    Year ended December 31,                         (Jan. 31, 1953)
                                                     -----------------------------------------------------                 to
                                                        1998                 1997                 1996               Dec. 31, 1998
                                                     -----------          -----------          -----------           -------------
<S>                                                  <C>                  <C>                  <C>                   <C>         
Interest and other income                            $   167,178          $   279,469          $   192,369           $  3,673,304
                                                     -----------          -----------          -----------           ------------

Expenses:
  Legal fees and costs                                   501,708            1,046,779              730,831             11,971,611
  Administrative expenses                                495,161              447,622              338,594              6,864,310
  Salaries                                               161,000              156,000              150,667              2,911,278
  Shareholder communications                             132,924              187,644               93,548              3,568,955
  Exploration costs                                       31,066               52,558               26,933                783,660
  Lawsuit judgments                                            -                    -                    -              1,941,916
  Minority interests                                           -                    -                    -               (632,974)
  Other                                                        -                    -                    -                364,865
  Contractual services                                         -                    -                    -              2,155,728
                                                     -----------          -----------          ----------- 
                                                       1,321,859            1,890,603            1,340,573             29,929,349
                                                     -----------          -----------          -----------           ------------

Net loss                                             $(1,154,681)         $(1,611,134)         $(1,148,204)
                                                     ============         ============         ============

Deficit accumulated during
  development stage                                                                                                   $(26,256,045)
                                                                                                                      ============= 

Net loss per share based on average
  number of shares outstanding during
  the period:
    Basic and Diluted EPS                               $(.03)               $(.04)               $(.03)
                                                        ======               ======               ======

Average number of shares outstanding
    (Basic and Diluted)                               40,056,358           40,055,589           37,477,617
                                                      ==========           ==========           ==========
</TABLE>


                             See accompanying notes.


<PAGE>


                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                             (A Bermuda Corporation)
                           A Development Stage Company

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (Expressed in U.S. Dollars)

<TABLE>
<CAPTION>
                                                                                                                         From
                                                                                                                       inception
                                                                         Year ended December 31,                    (Jan. 31, 1953)
                                                            --------------------------------------------------             to
                                                               1998               1997                1996           Dec. 31, 1998
                                                            -----------        -----------         -----------       -------------

Operating activities:
<S>                                                        <C>                <C>                 <C>                 <C>          
Net loss                                                   $(1,154,681)       $(1,611,134)        $(1,148,204)        $(26,256,046)
Adjustments to reconcile net loss to net cash
  used for operating activities:
    Minority interest                                                -                  -                   -             (632,974)
    Exploration and other                                            -                  -                   -              755,974
    Net change in:
       Accounts receivable                                      24,668             27,813             (98,278)             (52,634)
       Prepaid expenses                                       (100,440)           (34,972)            (53,526)            (314,280)
       Current liabilities                                       3,324           (198,447)            191,210               67,298
       Other                                                      (433)            (1,121)             34,063              471,709
                                                            -----------        -----------         -----------         ------------
Net cash used for operating activities                      (1,227,562)        (1,817,861)         (1,074,735)         (25,960,953)
                                                            -----------        -----------         -----------         ------------

Investing activities:
  Additions to oil, gas, and mineral
    properties net of assets acquired
    for common stock                                          (340,487)          (451,612)           (254,952)          (4,735,619)
  Marketable securities (net)                                1,304,196          1,910,226          (5,343,261)          (2,128,839)
  Reimbursement of lease rentals and
    other expenses                                                   -                  -                   -            1,243,086
  Purchase of fixed assets                                           -                  -                   -              (61,649)
                                                            -----------        -----------         -----------         ------------
Net cash provided by (used) for investing activities
                                                               963,709          1,458,614          (5,598,213)          (5,683,021)
                                                            -----------        -----------         -----------         ------------

Financing activities:
  Sale of common stock less expenses                                 -                  -           6,356,326           26,342,205
  Shares issued upon exercise of
    options                                                          -             11,250              13,500              884,249
  Sale of shares by subsidiary                                                          -                   -              750,000
  Sale of subsidiary shares                                          -            240,000             480,000            3,720,000
                                                            -----------        -----------         -----------         ------------
Net cash provided by financing activities                            -            251,250           6,849,826           31,696,454
                                                            -----------        -----------         -----------         ------------
Net increase (decrease) in cash
  and cash equivalents                                        (263,853)          (107,997)            176,878               52,480
Cash and cash equivalents at
  beginning of period                                          316,333            424,330             247,452                    -
                                                            -----------        -----------         -----------         ------------
Cash and cash equivalents at
  end of period                                              $  52,480           $316,333            $424,330            $  52,480
                                                             =========           ========            ========            =========
</TABLE>

                             See accompanying notes.


<PAGE>


                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                             (A Bermuda Corporation)
                           A Development Stage Company

                     CONSOLIDATED STATEMENT OF COMMON STOCK
                       AND CAPITAL IN EXCESS OF PAR VALUE
                           (Expressed in U.S. dollars)
             From inception (January 31, 1953) to December 31, 1998

<TABLE>
<CAPTION>
                                                                                                                       Capital in
                                                                         Number of                Common                 Excess
                                                                          Shares                  Stock               of Par Value
                                                                        ----------              ----------            ------------
<S>                                                                     <C>                    <C>                    <C>        
Shares issued for net assets and unrecovered costs
   at inception                                                          5,790,210              $  579,021             $ 1,542,868
Shares issued upon sales of common stock                                26,829,486               3,224,014              16,818,844
Shares issued upon exercise of stock options                               510,000                  59,739                 799,760
Market value ($2.375 per share) of shares issued in
  1953 to acquire an investment                                             54,538                   5,454                 124,074
Shares issued in 1953 in exchange for 1/3rd of a 1/60th
  overriding royalty (sold in prior year) in nonproducing
  leases of Coastal Petroleum                                               84,210                   8,421                       -
Market value of shares issued for services rendered
  during the period 1954-1966                                               95,188                   9,673                 109,827
Net transfers to restate the par value of common stock
  outstanding in 1962 and 1970 to $0.12 per share                                -                 117,314                (117,314)
Increase in Company's investment (equity) due to
  capital transactions of Coastal Petroleum in 1976                              -                       -                 117,025
                                                                        ----------              ----------             -----------
Balance at December 31, 1990                                            33,363,632               4,003,636              19,395,084
Sale of subsidiary shares                                                        -                       -                 300,000
                                                                        ----------              ----------             -----------
Balance at December 31, 1991                                            33,363,632               4,003,636              19,695,084
Sale of subsidiary shares                                                        -                       -                 390,000
                                                                        ----------              ----------             -----------
Balance at December 31, 1992                                            33,363,632               4,003,636              20,085,084
Sale of subsidiary shares                                                        -                       -               1,080,000
                                                                        ----------              ----------             -----------
Balance at December 31, 1993                                            33,363,632               4,003,636              21,165,084
Sale of subsidiary shares                                                        -                       -                 630,000
                                                                        ----------              ----------             -----------
Balance at December 31, 1994                                            33,363,632               4,003,636              21,795,084
Sale of subsidiary shares                                                        -                       -                 600,000
                                                                        ----------              ----------             -----------
Balance at December 31, 1995                                            33,363,632               4,003,636              22,395,084
Sale of common stock                                                     6,672,726                 800,727               5,555,599
Sale of subsidiary shares                                                        -                       -                 480,000
Exercise of stock options                                                   10,000                   1,200                  12,300
                                                                        ----------              ----------             -----------
Balance at December 31, 1996                                            40,046,358               4,805,563              28,442,983
Sale of subsidiary shares                                                        -                       -                 240,000
Exercise of stock options                                                   10,000                   1,200                  10,050
                                                                        ----------              ----------             -----------
Balance at December 31, 1997 and 1998                                   40,056,358              $4,806,763             $28,693,033
                                                                        ==========              ==========             ===========
</TABLE>

                             See accompanying notes.



<PAGE>


                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                   Notes to Consolidated Financial Statements
                                December 31, 1998

                                                                  
1.       Summary of significant accounting policies

Consolidation

         The accompanying consolidated financial statements include the accounts
of  Coastal  Caribbean  Oils &  Minerals,  Ltd.  ("Coastal  Caribbean")  and its
majority   subsidiary,   Coastal  Petroleum   Company   ("Coastal   Petroleum"),
hereinafter  referred to  collectively  as the Company.  The  Company,  which is
engaged in a single  industry and segment,  is  considered  to be a  development
stage  company since its  exploration  for oil, gas and minerals has not yielded
any significant  revenue or reserves.  All intercompany  transactions  have been
eliminated.

Cash and cash equivalents

         The Company  considers  all highly liquid short term  investments  with
maturities  of  three  months  or less at the  date  of  acquisition  to be cash
equivalents.  Cash and cash  equivalents are carried at cost which  approximates
market value. The components of cash and cash equivalents are as follows:

                                                        December 31,
                                             ----------------------------------
                                              1998                       1997
                                             -------                   --------
Cash                                         $52,480                   $118,859
U.S. Government Obligations                        -                    197,474
                                             -------                   --------
                                             $52,480                   $316,333
                                             =======                   ========

Use of Estimates

         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the amounts  reported in the financial  statements  and
accompanying notes. The outcome of the litigation and the ability to develop the
Company's oil and gas properties will have a significant effect on the Company's
financial  position and results of operations.  Actual results could differ from
those estimates.

Unproved oil and gas properties

         The Company follows the full cost method of  accounting for its oil and
gas properties.  All costs, whether successful or unsuccessful,  associated with
property  acquisition,  exploration and development  activities are capitalized.
Since the Company's  properties are  undeveloped and  nonproducing,  capitalized
costs are not being amortized.


<PAGE>



The Company  does not expect to amortize  these costs until there is  production
from the properties.  Production cannot begin until several events occur because
the Company must: (1) obtain state and federal  drilling permits (2) finance the
drilling of an exploratory well,  either with internal  resources or by securing
one  or  more  partners  in  the  drilling  activity,  (3)  discover  commercial
quantities  of oil and/or gas, and (4) finance and begin a  production  program.
The Company  cannot  predict if or when any of these events may occur;  however,
the Company expects that under the most favorable circumstances production would
not begin before 2000.  If the Company  obtains the permits to drill,  the total
cost of drilling an exploration well is currently  estimated to be approximately
$5.5 million.  The Company does not currently have assets sufficient to fund all
of this cost and would be required to seek debt or equity  financing from public
or private sources to drill the exploration  well, if a permit were granted.  If
oil and/or gas is  discovered  in commercial  quantities,  a production  program
would require additional permitting and construction of production,  storage and
delivery systems.  The Company would be required to seek additional financing to
fund these development activities.

         The Company assesses whether its unproved  properties are impaired on a
periodic  basis.  This assessment is based upon work completed on the properties
to  date,  the  expiration  date of its  leases  and  technical  data  from  the
properties  and  adjacent  areas.  These  properties  are  subject to  extensive
litigation  with the State of Florida.  Although the property  interests  may be
impaired by the actions taken by the State,  the likelihood of loss with respect
to the recorded  costs of the leasehold  interests is not probable.  (See Note 5
"Litigation".)  Based on the exploration  activities on the properties completed
to date, the  exploration  and  development  activities of others in the Gulf of
Mexico and the laws applicable to the taking of property, the Company expects to
recover  its  $4.7  million  of  capitalized  costs.  However,  there  can be no
assurance  that it will be  successful  and that  costs  associated  with  these
properties will be realized.

Sale of Subsidiary Shares

         All amounts  realized  from the sale of Coastal  Petroleum  shares have
been credited to capital in excess of par value.

Earnings per share

         Earnings per common share is based upon the weighted  average number of
common and common equivalent shares  outstanding  during the period. In February
1997, the FASB issued  Statement No. 128 Earnings per Share  ("EPS"),  which the
Company  adopted for the year ended December 31, 1997.  The Company's  basic and
diluted  calculations of EPS are the same because the exercise of options is not
assumed in calculating  diluted EPS, as the result would be  anti-dilutive  (the
Company has continuing losses).


<PAGE>



Financial instruments

         The carrying value for cash and cash equivalents,  accounts receivable,
U.S. Government securities and accounts payable approximates fair value based on
anticipated cash flows and current market conditions.

2.       Coastal Petroleum Company - Minority Interests

         In 1992,  Coastal Caribbean granted Lykes Minerals Corp.  ("Lykes"),  a
wholly owned  subsidiary of Lykes Bros.  Inc., an option to acquire 78 shares of
Coastal  Petroleum at $40,000 per share.  Lykes  exercised all of its options to
purchase Coastal  Petroleum shares at a total cost of $3,120,000 and at December
31, 1998 and 1997, held 26.7% of Coastal Petroleum.

         The Lykes  agreement  provides  that Lykes is entitled to exchange each
Coastal  Petroleum  share for  100,000  Coastal  Caribbean  shares,  subject  to
adjustment for dilution and other factors. If fully exercised,  that entitlement
would  leave  Lykes with about 16% of Coastal  Caribbean's  outstanding  shares.
Lykes also has the right to exchange  Coastal  Petroleum  shares for  overriding
royalty interests in Coastal Petroleum's  properties.  If Lykes were to exchange
its 26.7% interest in Coastal Petroleum for a royalty  interest,  its overriding
royalty interest in Coastal Petroleum's working-interest acreage would be 3.3%.

         As of  December  31,  1998,  Coastal  Petroleum  shares  were  owned as
follows:

                                                  Shares                    %
                                                  ------                  -----
         Coastal Caribbean                          173                    59.3
         Lykes                                       78                    26.7
         Other                                       41                    14.0
                                                    ---                   -----
                                                    292                   100.0
                                                    ===                   =====



<PAGE>


3.       Marketable Securities

         At December 31, 1998 and 1997, the Company had the following marketable
securities which were expected to be held until maturity:

                                 December 31, 1998
--------------------------------------------------------------------------------
                                           Maturity      Amortized
        Security            Par Value        Date           Cost      Fair Value
        --------            ---------        ----           ----      ----------
Short-term securities                   
Federal Home Loan Bank      $  150,000   Jan. 6, 1999    $  147,091   $  149,912
Federal Home Loan Bank         500,000   Feb. 22, 1999      486,422      489,938
Federal Home Loan Bank         200,000   May 11, 1999       195,326      195,550
                            ----------                   ----------    ---------
Total                       $  850,000                   $  828,839   $  835,400
                            ==========                   ==========   ==========
                                        
Long-term securities                    
Federal Home Loan Bank      $1,300,000  Jan. 28, 2000   $1,300,000   $1,300,403
                            ==========                  ==========   ==========

                                December 31, 1997
--------------------------------------------------------------------------------
                                           Maturity      Amortized
        Security            Par Value        Date           Cost      Fair Value
        --------            ---------        ----           ----      ----------
Federal Home Loan Bank                 
  Discounted Note           $  500,000   Feb. 11, 1998   $  487,191   $  493,200
U.S. Treasury Note             500,000   May 31, 1998       497,969      500,935
U.S. Treasury Note           1,500,000   Jul. 31, 1998    1,501,270    1,506,090
Federal Farm Credit Bank               
  Discounted Note            1,000,000   Aug. 18, 1998      946,605      953,042
                            ----------                   ----------   ----------
Total                       $3,500,000                   $3,433,035   $3,453,267
                            ==========                   ==========   ==========
                                      
4.       Unproved oil, gas and mineral properties

         Coastal  Petroleum holds three unproved and  nonproducing  oil, gas and
mineral leases granted by the Trustees of the Internal  Improvement  Fund of the
State of Florida (the "Trustees").  These leases cover submerged and unsubmerged
lands,  principally  along the Florida Gulf Coast,  and certain inland lakes and
rivers throughout the State.

         The two leases  bordering  the Gulf Coast have been  divided into three
areas,  each running the entire length of the coastline from Apalachicola Bay to
the Naples area.  Coastal  Petroleum has certain royalty  interests in the inner
area,  no  interest in the middle  area and has a 100%  working  interest in the
outside area.



<PAGE>


         Coastal  Petroleum also has a 100% working interest in Lake Okeechobee,
and a royalty  interest  in other  areas.  Coastal  Petroleum  has agreed not to
conduct  exploration,  drilling,  or mining operations on said lake, except with
prior approval of the Trustees.

         The  three  leases  have a term of 40 years  from  January  6, 1976 and
require the payment of annual lease rentals of $59,247;  if oil, gas or minerals
are being produced in  economically  sustainable  quantities at January 6, 2016,
these operations will be allowed to continue until they become  uneconomic.  The
drilling  requirements are governed by Chapter 20680,  Laws of Florida,  Acts of
1941.  The Company is current in fulfilling  its drilling  requirements.  During
July 1998,  the  Company  resumed the  payment of lease  rentals  which had been
suspended during the litigation.

         The working interest areas of the three leases are subject to royalties
payable to the  Trustees of 12 1/2% on oil and gas,  $.50 per long ton of sulfur
and 10% on other  minerals.  The leases are  subject  to  additional  overriding
royalties which  aggregate  1/16th as to oil, gas and sulfur and 13/600ths as to
other  minerals.  The  Coastal  Petroleum  leases  also  are  subject  to a  10%
overriding royalty granted by Coastal Petroleum to Coastal Caribbean.

         During 1998, the Company capitalized  approximately  $340,000 ($452,000
in 1997 and  $255,000 in 1996) under a program to  identify  potential  drilling
prospects.  The amount of 1999  expenditures  will  depend on the outcome of the
Florida litigation.

         A summary of the cost of  unproved  oil,  gas and  mineral  properties,
accounted for under the full cost method, all of which are located in Florida.

                                                           1998          1997
                                                        ----------    ----------
Lease acquisition costs                                 $  914,619    $  914,619
Lease and royalty costs (principally legal fees)           591,616       591,616
Lease rentals                                            2,388,527     2,329,280
Dry hole costs                                             587,987       587,987
Other exploratory expenses                               1,275,706       994,466
Salaries                                                   466,983       466,983
                                                        ----------    ----------
                                                         6,225,438     5,884,951
                                                        ----------    ----------
Deduct:
  Reimbursement for lease rentals and other expenses     1,243,086     1,243,086
  Proceeds from relinquishment of surface rights           246,733       246,733
                                                        ----------    ----------
                                                         1,489,819     1,489,819
                                                        ----------    ----------
                                                        $4,735,619    $4,395,132
                                                        ==========    ==========



<PAGE>


5.       Litigation

         Florida Litigation

         Coastal Petroleum has been involved in various lawsuits for many years.
Currently, Coastal Petroleum is a party to two actions in which two basic claims
are  being  contested:  Whether  Coastal  Petroleum  may  obtain  an oil and gas
exploration  drilling permit and the amount of the required surety in connection
with any drilling.  In addition,  Coastal Caribbean is a party to another action
in which Coastal  Caribbean  claims that certain of its royalty  interests  have
been confiscated by the State.

1.       Coastal  Petroleum  Company   v.   State  Department  of  Environmental
Protection,  (Case No. 98-1998, First District Court of Appeal). Drilling Permit
Litigation.

         In  1992,  Coastal  Petroleum  applied  to the  Florida  Department  of
Environmental  Protection  (the "DEP") for a permit to drill an exploratory  oil
and gas well off Apalachicola, Florida. The proposed well would be located in an
area included within Lease 224A. The DEP subsequently denied the application for
issuance of a drilling permit for various reasons including the requirement of a
$1.9  billion  bond.  Coastal  Petroleum  appealed the actions of the DEP to the
Florida First District Court of Appeal ("Court of Appeal").  After two decisions
by the Court of Appeal in favor of Coastal Petroleum,  the Florida Supreme Court
in July 1996  denied the DEP's  petition to review an April 1996 Court of Appeal
decision.  The Florida Supreme Court had also refused to review an earlier Court
of Appeal decision.

         On August 16, 1996,  the DEP  notified  Coastal  Petroleum  that it was
prepared to issue the drilling permit subject to Coastal Petroleum  publishing a
Notice of Intent to Issue ("Notice") the permit.  The Notice allowed  interested
parties to request administrative hearings on the permit.

         On May 28, 1997,  the Oil and Gas Drilling  Bill (SB550) was enacted in
Florida.  The  legislation  requires  that a  surety  will  now be  based on the
projected  cleanup costs and possible  natural  resource damage  associated with
offshore   drilling  as  estimated  by  the  DEP  and  as   established  by  the
Administration  Commission (the "Commission") which is comprised of the Governor
and  Cabinet.  Previously,  the  required  surety was  satisfied by a payment of
$4,000 to the Mineral Trust Fund in the first year,  with a maximum  $30,000 per
year and a payment of $1,500 per well for each subsequent  year. On September 9,
1997,  the  State of  Florida  set a new  surety  amount of $4.25  billion  as a
precondition for the issuance of the drilling permit.



<PAGE>


         During  1997,  the Company  published  a Notice of the DEP's  intent to
issue  the  permit.  On  October  20,  1997,  a  public  hearing  on the  permit
application convened and concluded on November 6, 1997. The hearing included the
Company's  appeal of the $4.25 billion surety  requirement.  On April 8, 1998, a
Florida Administrative Law Judge recommended that Coastal Petroleum was entitled
to a drilling permit with the  requirement of a $225 million surety.  On May 13,
1998,  the  Commission  rejected  the  $225  million  surety  and  remanded  the
proceedings to the Administrative Law Judge with instructions to recalculate the
surety amount.

         On May 26, 1998, the DEP refused to issue a permit to Coastal Petroleum
to drill an offshore exploration well near St. George's Island.

         Coastal Petroleum has appealed both the denial of the permit by the DEP
and the  imposition  of the surety to the Court of Appeal.  All of the briefs in
the case have been filed and the  Company  expects  that oral  argument  will be
scheduled in the near future.

2.       Coastal  Petroleum  Company   v.   State  of  Florida,   Department  of
Environmental Protection (DOAH Case Nos. 98-1901-1912). 12 Permit Applications.

         On February 25, 1997,  Coastal  Petroleum filed 12 permit  applications
with the DEP which were denied by the  Department  on March 24, 1998.  On August
31, 1998,  the State of Florida  Division of  Administrative  Hearings  issued a
Notice of Hearing to review the Department's denial of the permit  applications.
The hearing was held on January 4-8,  1999.  The parties are awaiting a decision
by the Administrative Law Judge which is expected during March 1999.

3.       Cottingham v. State of Florida,  (Case No. 94-768-CA-01,  Circuit Court
of the  Second  Judicial  Circuit in Leon  County).  Coastal  Caribbean  Royalty
Litigation.

         The  offshore  areas  covered by Coastal  Petroleum's  original  leases
(prior to the 1976  Settlement  Agreement)  are subject to certain other royalty
interests held by third parties,  including Coastal Caribbean.  Several of those
third parties,  including Coastal Caribbean,  have instituted a separate lawsuit
against the State.  That lawsuit  claims that their royalty  interests have been
confiscated as a result of the State's actions discussed above and that they are
entitled to compensation for that taking.

         The royalty holders were not parties to the 1976 Settlement  Agreement,
and the State's argument that the terms of the Settlement  Agreement insulate it
from  taking  claims  does  not  apply  to those  royalty  holders.  The case is
currently pending before the Circuit Court in Tallahassee.

         Any recovery made in the royalty holder's lawsuit would be shared among
the various  plaintiffs in that lawsuit,  including Coastal  Caribbean.  Coastal
Petroleum would not share in any such recovery.


<PAGE>

Fee Arrangements

         In connection with the Florida  Litigation against the State of Florida
described  herein,  Coastal  Petroleum has agreed to pay the following firms, in
addition to their  charges on a time spent  basis,  a total of 6% in  contingent
fees based upon any net recovery from execution on or  satisfaction  of judgment
or from settlement of such lawsuit as follows:

                                                        Percent of net recovery
                  Robert J. Angerer                               1.5
                  Other counsel                                   4.5
                                                                  ---
                  Total                                           6.0
                                                                  ===

         Coastal  Petroleum has also assigned  3.4% of net  recoveries  from the
Florida Litigation to its officers and others.

Uncertainty

         No assurances can be given that Coastal  Petroleum or Coastal Caribbean
will  prevail  on any of the  issues  set forth  above,  that they will  recover
compensation for any of their claims, or that a drilling permit will be granted.
In  addition,  even if  Coastal  Petroleum  were to prevail on any or all of the
issues to be  decided,  no  assurance  can be given that  Coastal  Caribbean  or
Coastal Petroleum will have sufficient financial resources to survive until such
decisions  become  final or to drill any wells for which  permits are  received.
There is also no assurance that any wells drilled will be successful and lead to
production of any oil or gas in commercial quantities.

6.       Common Stock

         The Company's  Bye-Law No. 21 provides that any matter to be voted upon
must be approved not only by a majority of the shares voted at such meeting, but
also by a majority in number of the  shareholders  present in person or by proxy
and entitled to vote thereon.

         The Company has been financing its  operations  primarily from sales of
common stock and sales of shares of Coastal Petroleum (See Note 2).

         During 1996, the Company sold  approximately  6.7 million shares to its
shareholders at $1.00 per share. The net proceeds to the Company were $6,356,326
after deducting the $316,400 cost of the offering.

         During July 1997, the  shareholders of the Company approved an increase
in the authorized  capital of the Company from 100,000,000 shares to 250,000,000
shares.


<PAGE>



         The following represents shares issued upon sales of common stock:

                            Number of                          Capital in Excess
                             Shares         Capital Stock         of Par Value
                            ---------       -------------      -----------------
              1953            300,000        $   30,000          $   654,000
              1954             53,000             5,300              114,265
              1955             67,000             6,700              137,937
              1956             77,100             7,710              139,548
              1957             95,400             9,540              152,492
              1958            180,884            18,088              207,135
              1959            123,011            12,301              160,751
              1960            134,300            13,430              131,431
              1961            127,500            12,750               94,077
              1962              9,900               990                8,036
              1963            168,200            23,548               12,041
              1964            331,800            46,452               45,044
              1965            435,200            60,928              442,391
              1966            187,000            26,180              194,187
              1967            193,954            27,153              249,608
              1968             67,500             9,450              127,468
              1969              8,200             1,148               13,532
              1970            274,600            32,952              117,154
              1971            299,000            35,880               99,202
              1972            462,600            55,512              126,185
              1973            619,800            74,376              251,202
              1974            398,300            47,796               60,007
              1975                  -                 -              (52,618)
              1976                  -                 -               (8,200)
              1977            850,000           102,000            1,682,706
              1978             90,797            10,896              158,343
              1979          1,065,943           127,914            4,124,063
              1980            179,831            21,580              826,763
              1981             30,600             3,672              159,360
              1983          5,318,862           638,263            1,814,642
              1985                  -                 -              (36,220)
              1986          6,228,143           747,378            2,178,471
              1987          4,152,095           498,251            2,407,522
              1990          4,298,966           515,876               26,319
              1996          6,672,726           800,727            5,555,599
                           ----------        ----------            ---------
                           33,502,212        $4,024,741          $22,374,443
                           ==========        ==========          ===========
                                        
         The following represents shares issued upon exercise of stock options:

              1955             73,000        $    7,300          $   175,200
              1978              7,000               840                6,160
              1979            213,570            25,628              265,619
              1980             76,830             9,219              125,233
              1981            139,600            16,752              227,548
              1996             10,000             1,200               12,300
              1997             10,000             1,200               10,050
                           ----------        ----------          -----------
                              530,000        $   62,139          $   822,110
                           ==========        ==========          ===========

         Coastal  Caribbean has reserved 7,800,000 shares which may be issued in
exchange for Coastal Petroleum shares, as described in Note 2.


<PAGE>



7.       Stock Option Plan

         The Company has elected to follow  Accounting  Principles Board Opinion
No. 25,  "Accounting  for Stock  Issued to  Employees"  (APB No. 25) and related
Interpretations in accounting for its stock options because the alternative fair
value  accounting  provided under FASB Statement No. 123,  "Accounting for Stock
Based  Compensation,"  requires  use of option  valuation  models  that were not
developed  for use in  valuing  stock  options.  Under APB No. 25,  because  the
exercise  price of the Company's  stock  options  equals the market price of the
underlying stock on the date of grant, no compensation expense is recognized.

         On March 7, 1995,  the Company  adopted a Stock  Option  Plan  covering
1,000,000 shares of the Company's common stock. Options are normally immediately
exercisable  and  issued  for a  period  of  five  years.  The  following  table
summarizes stock option activity:

<TABLE>
<CAPTION>
                                                                  Number of Shares           Exercise Price ($)
                                                                  ----------------           ------------------
<S>                                                                   <C>                        <C> 
Outstanding and exercisable at December 31, 1995                       320,000                      1.35
     Exercised                                                         (10,000)                     1.35
     Canceled                                                         (310,000)                     1.35
     Granted                                                           372,000                      1.13
                                                                       -------
Outstanding and exercisable at December 31, 1996                       372,000                      1.13
     Exercised                                                         (10,000)                     1.13
                                                                      --------
Outstanding and exercisable at December 31, 1997                       362,000                      1.13
     Granted                                                           225,000                      2.625
                                                                       -------
Outstanding and exercisable at December 31, 1998                       587,000                   1.13-2.625
                                                                       =======
                                                                                          (1.70 weighted average)
Available for grant at December 31,1998                                393,000
                                                                       =======
</TABLE>

         Pro forma  information  regarding  net income and earnings per share is
required by FASB  Statement  No. 123, and has been  determined as if the Company
had  accounted  for its  stock  options  under  the fair  value  method  of that
Statement.  The fair value for these  options was estimated at the date of grant
using a Black-Scholes option pricing model.

         Option  valuation  models  require  the  input  of  highly   subjective
assumptions including the expected stock price volatility.  The assumptions used
in the valuation model were: risk free interest rate - 5.45%,  expected life - 5
years, expected volatility - .707 and expected dividend - 0.


<PAGE>


         Because the Company's stock options have  characteristics significantly
different from those of traded  options,  and because  changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion,  the  existing  models do not  necessarily  provide a  reliable  single
measure of the fair value of its stock options.

         For the purpose of pro forma  disclosures,  the estimated fair value of
the  stock  options  is  expensed  in the year of grant  since the  options  are
immediately exercisable. The Company's pro forma information follows:

                                                      Amount           Per Share
                                                      ------           ---------
Net loss as reported - December 31, 1998            $(1,154,681)         $(.03)
Stock option expense                                   (369,000)          (.01)
                                                    ------------         ------
Pro forma net loss                                  $(1,523,681)         $(.04)
                                                    ------------         ------

8.       Income taxes

         Bermuda currently imposes no taxes on corporate income or capital gains
outside of Bermuda. The Company's  subsidiary,  Coastal Petroleum,  has U.S. net
operating loss  carryforwards  for federal and state tax purposes,  which may be
used to reduce its taxable income,  if any, during future years which aggregated
approximately  $11,806,000  at December  31, 1998 and expire in varying  amounts
from 1999 through 2013. For financial reporting purposes,  a valuation allowance
has been  recognized  to  offset  the  deferred  tax  assets  relating  to those
carryforwards.  Significant components of the Company's deferred tax assets were
as follows:

                                                     1998               1997
                                                     ----               ----
Net operating losses                             $ 4,443,000        $ 4,338,000
Deferred intercompany interest deduction             652,000            242,000
                                                 -----------        -----------
Total deferred tax assets                          5,095,000          4,580,000
Valuation allowance                               (5,095,000)        (4,580,000)
                                                 ------------       ------------
Net deferred tax assets                          $     -            $     -
                                                 ============       ============

9.       Related parties

         G&O'D INC provides  accounting and  administrative  services and office
facilities and support staff to the Company.  G&O'D INC is owned by Mr. James R.
Joyce,  Treasurer and Assistant  Secretary.  During 1998,  1997 and 1996,  G&O'D
billed fees of $160,764, $172,160 and $169,632, respectively.

         During 1996, the Company  agreed to reimburse  Lykes Minerals Corp. for
certain  legal  expenses  in the amount of $201,416  that Lykes had  incurred in
connection  with the Florida  Litigation  on the basis that these  expenses  had
directly benefited the Company.  This amount is included in accounts payable and
accrued liabilities.


<PAGE>



                                                                  
Item 9.           Changes in and Disagreements with Accountants on
                  Accounting and Financial Disclosure

                  None.


                                    PART III

         For information  concerning Item 10 - Directors and Executive  Officers
of the Company, Item 11 - Executive  Compensation,  Item 12 - Security Ownership
of Certain Beneficial Owners and Management and Item 13 - Certain  Relationships
and Related Transactions, see the Proxy Statement of the Company relative to the
Annual  Meeting of  Stockholders  for the fiscal year ended  December  31, 1998,
which  will  be  filed  with  the  Securities  and  Exchange  Commission,  which
information is incorporated herein by reference. For information concerning Item
10 - Executive Officers of the Company, see Part I.


<PAGE>


                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

         (a)      (1)      Financial Statements.

                           The  financial  statements  listed below and included
under Item 8 above are filed as part of this report.

                                                                            Page

Report of Independent Auditors                                               23

Consolidated balance sheets at December 31, 1998 and 1997                    24

Consolidated statements of operations from inception (January 31, 1953) to
  December 31, 1998 and for each of the three years in the period ended
  December 31, 1998                                                          25

Consolidated statements of cash flows from inception (January 31, 1953) to
  December 31, 1998 and for each of the three years in the period ended
  December 31, 1998                                                          26

Consolidated statements of common stock and capital in excess of
  par value from inception (January 31, 1953) to December 31, 1998           27

Notes to consolidated financial statements                                   28

                  (2)      Financial Statement Schedules:

                           All  schedules  have been omitted  since the required
information  is not  present or not  present in  amounts  sufficient  to require
submission of the schedule,  or because the information  required is included in
the consolidated financial statements and the notes thereto.

                  (3)      Exhibits.

                           List of each management contract  or  compensatory or
arrangement required to be filed as an exhibit pursuant to Item 14(c).

                           None.

         (b)      Reports on Form 8-K.

                  None.



<PAGE>


         (c)      Exhibits.

                  The following exhibits are filed as part of this report:

Item Number

         2.       Plan of acquisition, reorganization, arrangement,  liquidation
                  or succession.

                  Not applicable.

         3.       Articles of incorporation and By-Laws.

                  (a)      Memorandum  of  Association  as  amended  on June 30,
                           1982, May 14, 1985 and April 7, 1988 is filed herein.

                  (b)      Bye-laws  are  incorporated  by reference to Schedule
                           14(a) Proxy Statement filed on May 13, 1997.

         4.       Instruments defining the rights of security holders, including
                  indentures.

                  Not applicable.

         9.       Voting trust agreement.

                  Not applicable.

         10.      Material contracts.

                  (a)      Drilling Lease No. 224-A,  as modified,  between  the
                           Trustees of  the Internal  Improvement  Fund  of  the
                           State of Florida and Coastal  Petroleum Company dated
                           February 27, 1947 is filed herein.

                  (b)      Drilling  Lease No. 224-B,  as modified,  between the
                           Trustees  of the  Internal  Improvement  Fund  of the
                           State of Florida and Coastal  Petroleum Company dated
                           February 27, 1947 is filed herein.

                  (c)      Drilling  Lease No.  248,  as  modified,  between the
                           Trustees  of the  Internal  Improvement  Fund  of the
                           State of Florida and Coastal  Petroleum Company dated
                           February 27, 1947 is filed herein.

                  (d)      Settlement  Agreement  dated  January 6, 1976 between
                           Coastal Petroleum Company and the State of Florida is
                           filed herein.

                  (e)      Agreement  between the Company  and Coastal Petroleum
                           dated December 3, 1991 is filed herein.


<PAGE>


                  (f)      Agreement  between Lykes  Minerals  Corp. and Coastal
                           Caribbean  and Coastal  Petroleum  dated  October 16,
                           1992 is filed herein.

         11.      Statement re: computation of per share earnings.

                  None.

         12.      Statement re: computation of ratios.

                  Not applicable.

         13.      Annual  report to  security  holders,  Form 10-Q or  quarterly
                  report to security holders.

                  Not applicable.

         16.      Letter re: change in certifying accountant.

                  Not applicable.

         18.      Letter re: change in accounting principles.

                  Not applicable.

         21.      Subsidiaries of the registrant.

                  The Company has one subsidiary,  Coastal Petroleum Company,  a
                  Florida corporation.

         22.      Published  report  regarding  matters  submitted  to  vote  of
                  security holders.

                  Not applicable.

         23.      Consent of experts and counsel.

                  Consent of Ernst & Young LLP is filed herein.

         24.      Power of attorney.

                  Not applicable.

         27.      Financial data schedule.

                  Filed herein (EDGAR filing only).


<PAGE>

         99.      Additional exhibits.

                  Not applicable.

         (d)      Financial Statement Schedules.

                  None.



<PAGE>



                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                         COASTAL CARIBBEAN OILS & MINERALS, LTD.
                                                      (Registrant)

                                         By /s/ Benjamin W. Heath
                                            Benjamin W. Heath, President and
                                            Chief Executive Officer


Dated:        January 29, 1999                   

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the date indicated.

By /s/ Benjamin W. Heath                    By /s/ James R. Joyce
   Benjamin W. Heath                           James R. Joyce
   President, Director and Chief Executive     Treasurer and Chief Financial and
   Officer                                     Accounting Officer


Dated:        January 29, 1999             Dated:        January 29, 1999  
       ------------------------------             ------------------------------


By /s/ Graham B. Collis                     By /s/ John D. Monroe               
   Graham B. Collis                            John D. Monroe
   Director                                    Director


Dated:        January 29, 1999             Dated:        January 29, 1999  
       ------------------------------             ------------------------------


By /s/ Phillip W. Ware                      By /s/ Nicholas B. Dill             
   Phillip W. Ware                             Nicholas B. Dill
   Director                                    Director


Dated:        January 29, 1999             Dated:        January 29, 1999  
       ------------------------------             ------------------------------



<PAGE>




                                INDEX TO EXHIBITS


Exhibit No.

         3.       (a)      Memorandum of Association  as  amended  on  June  30,
                           1982, May 14, 1985 and April 7, 1988

         10.      (a)      Drilling Lease No. 224-A, as  modified,  between  the
                           Trustees of the  Internal  Improvement  Fund  of  the
                           State of Florida and  Coastal Petroleum Company dated
                           February 27, 1947

                  (b)      Drilling Lease No. 224-B, as  modified,  between  the
                           Trustees of the  Internal  Improvement  Fund  of  the
                           State of Florida and  Coastal Petroleum Company dated
                           February 27, 1947

                  (c)      Drilling  Lease No.  248,  as  modified,  between the
                           Trustees  of the  Internal  Improvement  Fund  of the
                           State of Florida and Coastal  Petroleum Company dated
                           February 27, 1947

                  (d)      Settlement Agreement  dated  January 6, 1976  between
                           Coastal Petroleum Company and the State of Florida

                  (e)      Agreement  between the Company and  Coastal Petroleum
                           dated December 3, 1991

                  (f)      Agreement between Lykes Minerals Corp. and Coastal
                           Caribbean and Coastal Petroleum dated October 16,
                           1992

         23.      Consent of Ernst & Young LLP

         27.      Financial Data Schedule (EDGAR filing only)