UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





x
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
      EXCHANGE ACT OF 1934




For the
quarterly period ended June 30,
2010




 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
      EXCHANGE ACT OF 1934





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 Identification No.)incorporation
      or organization)





Clarendon
      House, Church Street, Hamilton, Bermuda
                        
                        HM
      11(Address
      of principal executive offices)
                        
                        (Zip
      Code)





(850)
      556-5924(Registrant's
      telephone number, including area
code)








(Former
name, former address and former fiscal year, if changed since last
report)





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 whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). x
Yes   ̈  No




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):






Large
      accelerated filer o
              Accelerated
      filer oNon-accelerated
      filer o (Do
      not check if smaller reporting company)
              Smaller
      reporting company x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).   ̈  Yes  x No





The
number of shares outstanding of the issuer's single class of common stock as of
August 14, 2009 was 62,661,604.





COASTAL
CARIBBEAN OILS & MINERALS, LTD.





FORM
10-Q





June 30,
2010





Table
of Contents








PagePART
      I - FINANCIAL INFORMATIONITEM
      1
                                            Financial
      StatementsConsolidated
      balance sheets at June 30, 2010 and December 31, 2009
                                            3Consolidated
      statements of operations for the three and six month periods ended June
      30, 2010 and 2009  and for the period from January 31, 1953
      (inception) to June 30, 2010
                                            4Consolidated
      statements of cash flows for the six month periods ended June 30, 2010 and
      2009 and for the period from January 31, 1953 (inception) to June 30,
      2010
                                            5Notes
      to consolidated financial statements
                                            6ITEM
      2
                                            Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                            11ITEM
      3
                                            Quantitative
      and Qualitative Disclosure About Market Risk
                                            15ITEM
      4
                                            Controls
      and Procedures
                                            15PART
      II - OTHER INFORMATIONITEM
      1
                                            Legal
      Proceedings
                                            17ITEM
      5
                                            Other
      Information
                                            17ITEM
      6
                                            Exhibits
                                            18Signatures
                                            19




2


COASTAL
CARIBBEAN OILS & MINERALS, LTD.





FORM
10-Q





PART
I - FINANCIAL INFORMATION





ITEM 1 - Financial
Statements





CONSOLIDATED
BALANCE SHEETS


(Expressed
in U.S. dollars)





(A
Bermuda Corporation)


A
Development Stage Company





June 30,
                
                
                December 31,2010
                
                
                2009(Unaudited)
                
                
                (Note)AssetsCurrent
      assets:Cash
      and cash equivalents
                
                $
                1,913
                
                
                $
                9,207Total
      current assets
                
                
                1,913
                
                
                
                9,207Certificates
      of deposit - Restricted
                
                
                86,750
                
                
                
                85,255Petroleum
      leases
                
                
                2,303,824
                
                
                
                2,257,741Equipment,
      net
                
                
                2,635
                
                
                
                3,895Total
      assets
                
                $
                2,395,122
                
                
                $
                2,356,098Liabilities
      and Shareholders’ EquityCurrent
      liabilities:Accounts
      payable and accrued liabilities
                
                $
                114,940
                
                
                $
                242,693Notes
      payable
                
                
                25,000
                
                
                
                73,198Amounts
      due to related parties
                
                
                883,650
                
                
                
                1,098,949Total
      current liabilities
                
                
                1,023,590
                
                
                
                1,414,840Shareholders'
      equityCommon
      stock, par value $.12 per share:Authorized
      - 250,000,000 sharesOutstanding
      – 62,661,604 and47,936,604
      shares, respectively
                
                
                7,519,392
                
                
                
                5,752,392Discount
      on common stock
                
                
                (1,282,625
                )
                
                
                (103,475
                )Capital
      in excess of par value
                
                
                32,139,311
                
                
                
                32,139,311Stock
      subscription
                
                
                -
                
                
                
                10,00038,376,078
                
                
                
                37,798,228Deficit
      accumulated during the development stage
                
                
                (37,004,546
                )
                
                
                (36,856,970
                )Total
      shareholders’ equity
                
                
                1,371,532
                
                
                
                941,258Total
      liabilities and shareholders’ equity
                
                $
                2,395,122
                
                
                $
                2,356,098




Note: The
balance sheet at December 31, 2009 has been derived from


the
audited consolidated financial statements at that date.





See accompanying
notes.




3




COASTAL
CARIBBEAN OILS & MINERALS, LTD.





FORM
10-Q





PART
I - FINANCIAL INFORMATION





ITEM 1 - Financial
Statements





CONSOLIDATED
STATEMENTS OF OPERATIONS


(Expressed
in U.S. dollars)





(A
Bermuda Corporation)


A
Development Stage Company





(Unaudited)


For
      theperiod fromJan.
      31,
                        1953(inception)Three months ended June 30,
                      
                      
                      Six months ended June 30,
                      
                      
                      to
                        June 30,2010
                      
                      
                      2009
                      
                      
                      2010
                      
                      
                      2009
                      
                      
                      2010Interest
      and other income
                      
                      $
                      830
                      
                      
                      $
                      319
                      
                      
                      $
                      1,494
                      
                      
                      $
                      347
                      
                      
                      $
                      3,985,955Gain
      on settlement
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      8,124,016830
                      
                      
                      
                      319
                      
                      
                      
                      1,494
                      
                      
                      
                      347
                      
                      
                      
                      12,109,971Expenses:Legal
      fees and costs
                      
                      
                      2,646
                      
                      
                      
                      37,095
                      
                      
                      
                      2,646
                      
                      
                      
                      75,668
                      
                      
                      
                      17,657,203Administrative
      expenses
                      
                      
                      26,269
                      
                      
                      
                      82,664
                      
                      
                      
                      78,847
                      
                      
                      
                      152,519
                      
                      
                      
                      11,138,214Salaries
                      
                      
                      31,250
                      
                      
                      
                      31,250
                      
                      
                      
                      64,359
                      
                      
                      
                      62,500
                      
                      
                      
                      4,460,790Shareholder
      communications
                      
                      
                      1,889
                      
                      
                      
                      13,380
                      
                      
                      
                      3,218
                      
                      
                      
                      14,706
                      
                      
                      
                      4,152,834Goodwill
      impairment
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      801,823Write
      off of unproved properties
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      6,690,752Exploration
      costs
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      188,218Lawsuit
      judgments
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      1,941,916Minority
      interests
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (632,974
                      )Other
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      364,865Contractual
      services
                      
                      
                      -
                      
                      
                      
                      96,409
                      
                      
                      
                      -
                      
                      
                      
                      96,409
                      
                      
                      
                      2,350,87662,054
                      
                      
                      
                      260,798
                      
                      
                      
                      149,070
                      
                      
                      
                      401,802
                      
                      
                      
                      49,114,517Income
      tax benefit
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Net
      loss
                      
                      $
                      (61,224
                      )
                      
                      $
                      (260,479
                      )
                      
                      $
                      (147,576
                      )
                      
                      $
                      (401,455
                      )Deficit
      accumulated during the development stage
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      $
                      (37,004,546
                      )Weighted
      average number of Shares outstanding (basic & diluted)
                      
                      
                      62,444,397
                      
                      
                      
                      46,261,604
                      
                      
                      
                      61,190,771
                      
                      
                      
                      46,261,604Net
      loss per share (basic & diluted)
                      
                      $
                      (.00
                      )
                      
                      $
                      (.01
                      )
                      
                      $
                      (.00
                      )
                      
                      $
                      (.01
                      )





See
accompanying notes.


4


COASTAL
CARIBBEAN OILS & MINERALS, LTD.


FORM
10-Q


PART
I - FINANCIAL INFORMATION





ITEM 1 - Financial
Statements





CONSOLIDATED
STATEMENTS OF CASH FLOWS


(Expressed
in U.S. Dollars)





(A
Bermuda Corporation)


A
Development Stage Company


(Unaudited)





For the period from
                              Jan. 31, 1953Six
      months ended
                            
                            
                            (inception)June
      30,
                            
                            
                            To2010
                            
                            
                            2009
                            
                            
                            June 30, 2010Operating
      activities:Net
      loss
                            
                            $
                            (147,576
                            )
                            
                            $
                            (401,455
                            )
                            
                            $
                            (37,004,546
                            )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Gain
      on settlement
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (8,124,016
                            )Goodwill
      impairment
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            801,823Minority
      interest
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (602,949
                            )Depreciation
                            
                            
                            1,260
                            
                            
                            
                            1,260
                            
                            
                            
                            10,338Write
      off of unproved properties
                            
                            
                            -
                            
                            
                            
                            96,409
                            
                            
                            
                            6,690,752Common
      stock issued for services
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            119,500Compensation
      recognized for stock option grant
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            75,000Recoveries
      from previously written off properties
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            252,173Net
      change in:Prepaid
      expenses
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -Accounts
      payable and accrued liabilities
                            
                            
                            (125,202
                            )
                            
                            
                            296,076
                            
                            
                            
                            1,159,175Net
      cash used in operating activities
                            
                            
                            (271,518
                            )
                            
                            
                            (7,710
                            )
                            
                            
                            (36,622,750
                            )Investing
      activities:Additions
      to oil, gas, and mineral propertiesnet
      of assets acquired for common stock
      and  reimbursements
                            
                            
                            (46,083
                            )
                            
                            
                            (38,632
                            )
                            
                            
                            (6,499,335
                            )Well
      drilling costs
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (1,071,011
                            )Sale
      of unproved nonoperating interests
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            512,595Net
      proceeds from settlement
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            8,124,016Proceeds
      from relinquishment of surface rights
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            246,733Purchase
      of certificate of deposit
                            
                            
                            (1,495
                            )
                            
                            
                            (347
                            )
                            
                            
                            (141,405
                            )Redemption
      of certification of deposit
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            54,655Purchase
      of minority interest in CPC
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (801,823
                            )Purchase
      of fixed assets
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (74,623
                            )Net
      cash provided by (used in) investing activities
                            
                            
                            (47,578
                            )
                            
                            
                            (38,979
                            )
                            
                            
                            349,802Financing
      activities:Notes
      payable proceeds
                            
                            
                            -
                            
                            
                            
                            48,198
                            
                            
                            
                            184,988Repayment
      of loans
                            
                            
                            (48,198
                            )
                            
                            
                            -
                            
                            
                            
                            (159,988
                            )Sale
      of common stock net of expenses
                            
                            
                            360,000
                            
                            
                            
                            -
                            
                            
                            
                            30,818,112Shares
      issued upon exercise of options
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            891,749Sale
      of shares by subsidiary
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            820,000Sale
      of subsidiary shares
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            3,720,000Net
      cash provided by financing activities
                            
                            
                            311,802
                            
                            
                            
                            48,198
                            
                            
                            
                            36,274,861Net
      increase (decrease) in cash and cash equivalents
                            
                            
                            (7,294
                            )
                            
                            
                            1,509
                            
                            
                            
                            1,913Cash
      and cash equivalents at beginning of period
                            
                            
                            9,207
                            
                            
                            
                            752
                            
                            
                            
                            -Cash
      and cash equivalents at end of period
                            
                            $
                            1,913
                            
                            
                            $
                            2,261
                            
                            
                            $
                            1,913





See
accompanying notes.


5


COASTAL
CARIBBEAN OILS & MINERALS, LTD.


FORM
10-Q


PART
I - FINANCIAL INFORMATION





June
30, 2010





ITEM
1        Financial
Statements





Note
1.            Basis of
Presentation





The
accompanying unaudited consolidated financial statements include Coastal
Caribbean Oils & Minerals, Ltd. (“the Company”) and its wholly owned
subsidiary, Coastal Petroleum Company (“Coastal Petroleum”) and have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X.  Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.  In the opinion of management, all
adjustments considered necessary for a fair presentation have been
included.  All such adjustments are of a normal recurring
nature.  Operating results for the three and six month periods ended
June 30, 2010 are not necessarily indicative of the results that may be expected
for the year ending December 31, 2010.  For further information, refer
to the consolidated financial statements and footnotes thereto included in the
Company’s Annual Report on Form 10-K for the year ended December 31,
2009.





Note
2.            Going
Concern





As of
June 30, 2010, the Company had no revenues, had recurring losses from operations
and has had an accumulated deficit during the development stage.  The
Company's current cash position is not adequate to fund existing operations or
exploration and development of its oil and gas properties.  Currently,
management is actively pursuing funding to allow the Company to undertake
exploration efforts on its own.  The Company is in discussions with a
director regarding further funding for the Company to continue operations and
exploration of its leases.  The Company continues to be in contact
with several parties interested in investing in the Company so that the Company
could explore its leases on its own.  In addition, the Company has
been in contact with other parties interested in working with the Company, in
buying some of the Company’s leases or in buying an interest in those
leases.  There is no assurance that the Company will be able to obtain
any funding, that the director will exercise the options under the current
agreement, that sufficient funding can be obtained, or that the Company will be
able to raise necessary funds through the sale of some of its leases or
interests in those leases.





These
situations raise substantial doubt about the Company’s ability to continue as a
going concern.  The consolidated financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and
classification of assets or amounts and classification of liabilities, which may
result from the outcome of this uncertainty.





Note
3.            Net loss per
share





Net loss
per share is based upon the weighted average number of common and common
equivalent shares outstanding during the period.  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.


6


COASTAL
CARIBBEAN OILS & MINERALS, LTD.


FORM
10-Q


PART
I - FINANCIAL INFORMATION





June
30, 2010





ITEM
1        Financial
Statements(Continued)





Note
4.            Unproved Oil, Gas and
Mineral Properties





Farm-out Agreements and
Drilling Activity





In May
2008, we entered an agreement with Cobra.  Under the agreement, Cobra
paid Coastal $180,000 for the option to acquire a half interest in approximately
87,000 acres of Coastal’s Valley County Leases.  The agreement allowed
the Company to pay its Lease rentals that were due on June 1, 2008, and brought
in a new party to explore on the Leases. Cobra had until May 2010 to exercise
the option by spending $1,000,000 on behalf of the Company, drilling wells on
the leases covered by the agreement.  No drilling was performed under
this agreement and it expired by its terms.





Montana
Leases





The
Company’s primary presence in Montana is in Valley County, where it holds leases
covering approximately 32,313 net acres, which are the remaining unexpired
leases from those leases the Company acquired in three separate acquisitions
between July 2005 and February 2006.  Certain leases covering 3,560
net acres expired during the second quarter of 2010. The leases acquired in
those acquisitions are contiguous to each other and are referred to collectively
as “the Valley County Leases.”





The first
acquisition of the Valley County Leases was in July 2005, when the Company
acquired the rights to drill two 6,500 foot wells to test Mississippian
Lodgepole reefs in Valley County, in northeast Montana for a one time fee of
$50,000 from an entity controlled by one of the Company’s Directors. That
acquisition included a small amount of acreage and the option to drill fifty
additional prospects in the Valley County area.





The
second acquisition of the Valley County Leases was in November 2005, when the
Company acquired a group of oil and gas lease rights to approximately 109,423
net acres in eastern Montana for $1,568,000 from EOG Resources, Inc. and Great
Northern Gas Company. These leases are subject to various overriding royalty
interests to others ranging up to 19.5%. These leases expire in years from 2011
to 2014.





The final
acquisition of acreage within the Valley County Leases was in February 2006,
when the Company acquired additional oil and gas leases in eastern Montana
covering 27,740 net acres contiguous to its existing Montana leases. These
leases were acquired from the Bureau of Land Management and United States
Department of the Interior.





The
Company borrowed $126,000 in May 2007 to pay its lease obligations that were due
in June 2007 on approximately 42,000 acres. Coastal assigned a 5% overriding
royalty interest (before all expenses) in 8/8ths of the oil or natural gas
produced from those Valley County Montana leases to the lender. The loan was
repaid on October 15, 2007, prior to the spudding of the first well on the
acreage, out of the money advanced by Western Standard to cover lease rentals
under their agreement with the Company.


7


COASTAL
CARIBBEAN OILS & MINERALS, LTD.


FORM
10-Q


PART
I - FINANCIAL INFORMATION





June
30, 2010





ITEM
1        Financial
Statements(Continued)





Note
4.            Unproved Oil, Gas and
Mineral Properties  (Continued)





North Dakota
Leases





In July
2005, the Company acquired leases to the deeper rights in approximately 21,688
net acres in and near Slope County, North Dakota for a one-time fee of $50,000
from an entity controlled by one of the Company’s Directors and the Company has
invested some additional funds to geochemically test and high-grade these and
other prospects on the leases. Since that time, some of the leases have expired
and the Company currently holds leases on approximately 8,748 gross and 8,510
net acres in North Dakota. The Company is obligated to drill a test well on the
original leases totaling 7,031.08 acres before November 1, 2010, and has the
option to drill the remaining Lodgepole Reef prospects on these leases. The
Company had intended to team with other entities to share the cost of the
initial 9,700 foot test well, the total estimated drilling cost of which is
estimated to be $1,750,000, however, it is unlikely that the Company will be
able to identify and contract with a team prospect prior to the expiration date.
If sufficient funding can be secured as a result of current discussions with one
of the Company’s directors, the Company intends to drill one Lodgepole reef
prospect on its own.  The leases making up the remaining acreage were
leased by the Company and have no obligation associated with them. The Company
is actively seeking funding sufficient to allow it to explore its leases on its
own.





In an
effort to explore the North Dakota leases, in December of 2008, the Company
entered a new farm-out agreement with Western Standard.  Under the
agreement, the Company assigned leases over four of its high-graded Lodgepole
Reef prospects to Western Standard in return for $80,000, which was recorded as
a reduction in capitalized petroleum lease costs.  The Company has
also retained a back-in working interest of 20% in the leases after
payout.  Oil For America has agreed to waive the drilling obligation
on these four prospects.  The Company still retains additional
Lodgepole reef prospects on its North Dakota leases that are not covered by this
farm-out agreement.





Note
5.            Income
Taxes





For the
three and six month periods ending June 30, 2010and 2009, the Company
reported a loss for both financial statement reporting and income tax
purposes.  The Company has provided a 100% valuation allowance on its
deferred tax asset as a result of its net operating loss
carryforwards.  The Company had approximately $10,000,000 in net
operating loss carryforwards at December 31, 2009.





Note
6.            Related Party
Transactions





Through
May 2009, the Company paid a monthly retainer to the law firm of Angerer &
Angerer which had been litigation counsel to the Company for more than
twenty-five years and also served the Company in that capacity as well as others
including general counsel services, management services, public relations,
shareholder relations and representing the Company before state and federal
agencies for permitting.  The principals of the law firm included two
individuals who are collectively shareholders, officers and a director of the
Company.  The Company expensed $60,000 in legal fees for the six
months ended June 30, 2009, including $24,000 in legal fees for the three months
ended June 30, 2009.  There were no legal fees to Angerer &
Angerer for 2010.  The Company owes $150,000 in accrued legal fees to
Angerer & Angerer as of June 30, 2010.


8


COASTAL
CARIBBEAN OILS & MINERALS, LTD.


FORM
10-Q


PART
I - FINANCIAL INFORMATION





June
30, 2010





ITEM
1        Financial
Statements(Continued)





Note
6.            Related Party
Transactions  (Continued)





Since
June 2009, the Company retained Robert J. Angerer, Sr. as legal
counsel.  Mr. Angerer has been litigation counsel to the Company for
more than twenty-five years and resigned as counsel on January 14,
2010.  As counsel for the Company he served the Company as
litigation counsel, but also provided the Company with general counsel services
and management services and represented the Company before state and federal
agencies for permitting.  Mr. Angerer, Sr. is also a shareholder and a
director of the Company.  The Company expensed $11,600 in legal fees
to Mr. Angerer, Sr. for the three and six month periods ended June 30,
2009.  There were no legal fees to Mr. Angerer, Sr. for
2010.





Also
since June 2009, the Company has retained Robert J. Angerer, Jr. who serves as
the Company’s corporate secretary and handles management services, public
relations, shareholder relations and management of the Company’s
website.  There was no compensation to Mr.  Angerer, Jr. for
the three and six month periods ended June 30, 2010 and 2009.





The
Company has retained the law firm of Igler & Dougherty, P.A. as securities
counsel.  Mr. Herbert D. Haughton, a shareholder of the firm, was
elected a director of Coastal Caribbean and of Coastal Petroleum in December
2005.  The Company expensed $7,795 and $6,258 in legal fees and costs
for the six months ended June 30, 2010 and 2009, respectively, including $5,300
and $2,360 in legal fees for the three months ended June 30, 2010 and 2009,
respectively.




Note
7.            Certificates of Deposit –
Restricted





The
Company has pledged certificates of deposit for pollution bond requirements
under three previous well permits.





Note
8.            Notes
Payable





During
the first six months of 2009, the Company borrowed $48,198 from two individuals,
which was used to make annual rental payments on specific leases.  The
loans are non interest bearing and have no set repayment terms.  The
individuals were granted a 0.5% royalty interest in the leases for which the
borrowed money was used to pay rentals, which are located primarily in the
Starbuck prospect area in Montana.  These loans were repaid in January
2010.


9


COASTAL
CARIBBEAN OILS & MINERALS, LTD.


FORM
10-Q


PART
I - FINANCIAL INFORMATION





June
30, 2010





ITEM
1        Financial
Statements(Continued)





Note
8.            Notes Payable
(Continued)





During
August 2009, the Company borrowed $25,000 from a consultant and also agreed to
pay the consultant a fee of $25,000 to identify investors to consummate an
agreement and fund the Drilling Plan.  The funds from the loan were
used to pay the Company’s annual corporate fee to Bermuda as well as certain
other operational expenses.  The loan is non interest bearing and has
no set repayment terms.  No investor agreements have been consummated
by the consultant at June 30, 2010, therefore the $25,000 loan is not currently
due and the $25,000 fee has not been earned.





Note
9.            Stock
Transactions





On
January 14, 2010, the Company and Coastal Petroleum entered into a letter
agreement with Robert J. Angerer, Sr. for the funding of immediate cash needs
and granting Mr. Angerer an option to fund the Company’s and Coastal Petroleum’s
future obligations.  Under the agreement Mr. Angerer provided
compensation to the Company including $300,000 cash and the forgiveness of
$150,000 of legal fees owed to his law firm, Angerer & Angerer,
forgiveness of $21,500 in director fees owed to him and credit of $240,000 for
the completion of the Company’s purchase of leases on which there is a Red River
oil and gas development prospect.  In return, Mr. Angerer was issued
14,400,000 Rule 144 restricted shares of the Company’s common stock and provided
an option to further fund the Company.  Mr. Angerer may exercise up to
four options by paying $3 million for each option beginning three months after
the date of the agreement and thereafter in three month intervals.  In
return for the funding, Mr. Angerer would earn up to a total of 36% of the
Company’s operations in North Dakota and Montana in increments per exercised
option and a 20% interest in Coastal Petroleum.  There is also one
extension available to extend the time to exercise the first option for three
months in exchange for the payment of $50,000. Simultaneous with this
transaction, Mr. Angerer resigned as the Vice President of both the Company and
Coastal, but will remain as a Director and the Chairman of the Board of
Directors for both the Company and Coastal Petroleum.





On April
29, 2010, Mr. Angerer paid $50,000 and elected to extend the option to fund the
Company’s operations. However, Mr. Angerer did not exercise his option within
the required time and subsequent to June 30, 2010, the agreement expired by its
terms.





On May
28, 2010, the Company entered agreements with two individuals who paid $10,000
each in return for each individual receiving 162,500 shares of the Company’s
common stock and a 1⁄4% overriding royalty in Coastal Petroleum’s Starbuck East
Montana shallow gas leases.    An entity that brought the
investors to the Company also received a similar overriding royalty and 67,000
shares of the Company’s common stock.  The Company used this money to
pay the lease rentals that were due on June 1, 2010.





Note
10.          Subsequent
Events





Subsequent
to the end of the second quarter of 2010, the time for Mr. Angerer to exercise
his option, under the agreement discussed above, passed without the option being
exercised.  Mr. Angerer and the Company continue to discuss funding of
the Company.


10


COASTAL
CARIBBEAN OILS & MINERALS, LTD.


FORM
10-Q


PART
I - FINANCIAL INFORMATION





June
30, 2010





ITEM 2
            Management's
      Discussion and Analysis of Financial Condition
      andResults of
      Operations





Forward
Looking Statements





Statements included in Management’s
Discussion and Analysis of Financial Condition and Results of Operations, which
are not historical in nature are intended to be forward looking
statements.  The Company cautions readers that forward looking
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those indicated in the forward looking
statements.  Among the risks and uncertainties are: the uncertainty of
securing additional funding through the sale of shares of Coastal Petroleum
and/or Coastal Caribbean; changes in the income tax laws relating to tax loss
carry forwards; the failure of the Company’s test wells to locate oil or gas
reserves or the failure to locate oil or gas reserves which are economically
feasible to recover; reductions in world wide oil or gas prices; adverse weather
conditions; or mechanical failures of equipment used to explore the Company’s
leases.





Critical
Accounting Policies





The Company follows the full cost
method of accounting for its oil and gas properties.  All costs
associated with property acquisition, exploration and development activities
whether successful or unsuccessful are capitalized





The capitalized costs are subject to a
ceiling test which basically limits such costs to the aggregate of the estimated
present value discounted at a 10% rate of future net revenues from proved
reserves, based on current economic and operating conditions, plus the lower of
cost or fair market value of unproved properties.





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.





General





We are an
active independent oil and gas exploration company and through our subsidiary,
Coastal Petroleum, we hold mineral rights in Montana and North Dakota in the oil
producing region known as the Williston Basin.  Our objective
formations on those leases include the Lodgepole and the Eagle among
others.  The Company's future growth will be driven primarily by
exploration and development activities.  Our business strategy is to
increase shareholder value by acquiring and drilling reasonably priced prospects
that have good potential, whether in the Williston Basin or in other parts of
the United States, with the goal of shaping the Company into a producing
independent oil and gas firm. We will continue to seek high quality exploration
projects with potential for providing long-term drilling inventories that
generate high returns.





In
Montana, we have obtained the rights to explore for oil and gas in one area
which will be our primary area of focus.  This primary area is a large
assembly of leases covering approximately 32,313 net acres in Valley County,
located in northeastern Montana close to known production from a Lodgepole
reef.  While the Company originally held a greater amount of acreage,
some of those leases have expired.  Certain leases covering 3,560 net
acres expired during the second quarter of 2010.


11


COASTAL
CARIBBEAN OILS & MINERALS, LTD.


FORM
10-Q


PART
I - FINANCIAL INFORMATION





June
30, 2010




ITEM 2
            Management's
      Discussion and Analysis of Financial Condition
      andResults
      of Operations(Continued)





This area
of Montana has a number of other producing formations in addition to the
Lodgepole, including the Eagle sands.  Currently we have one agreement
with a party covering some of the areas of the leases.  We also hold
leases in southwestern North Dakota and have an agreement covering four
Lodgepole prospects on those leases.





We are
actively engaged in pursuing funding for our Drilling Program.  The
Drilling Program is an aggressive $9,500,000 exploration operation which would
allow us to explore the potential of each of the areas we hold under
lease.  The Drilling Program covers exploration in three areas: a
development Red River Formation prospect in Slope County, North Dakota, on
approximately 400 acres we acquired; the drilling of three Lodgepole Formation
prospects we have on our North Dakota Leases; and twelve step-out wells from the
Federal 1-19 well on the Starbuck East prospect in Montana.  The
Company is proceeding with the relatively inexpensive process of permitting
wells in its main block of leases in Valley County, Montana, in order to
accommodate the drilling of the expected wells.





During
2009 and so far in 2010, we have been primarily focused on and engaged in
raising capital to fund the Company so that we could recommence the exploration
of our leases.  Due to the recession and the fragile state of the
country’s financial market, capital was a scarce commodity to
obtain.  While we contacted, met with and negotiated with various
individuals and groups during the year, none were able to provide the capital
necessary.  While we were close to consummating an agreement with one
entity and amended the articles of our subsidiary to be prepared to complete the
transaction, the other party could not deliver the capital as
promised.  The combination of the broken deal and the state of the
economy left the Company with no other viable alternative other than to sell
shares of its common stock to raise capital necessary to remain a viable public
company and to retain its most valuable leases.  We sold a total of
1,191,333 shares of common stock and raised $67,500, while continuing to search
for the capital needed to fund our Drilling Plan.





On
January 14, 2010, Robert J. Angerer, Sr., the chairman of the board of directors
and vice president of the Company at the time, entered into a letter agreement
for the funding of immediate cash needs and granting Mr. Angerer an option to
fund the Company’s and Coastal’s future obligations.  The agreement was
similar to the deal that was not consummated by a third party during
2009. Under the agreement Mr. Angerer provided compensation to the Company
including $300,000 cash and the forgiveness of $150,000 of legal fees owed
to his law firm, Angerer & Angerer, forgiveness of $21,500 in director fees
owed to him and credit of $240,000 to him for the completion of the Company’s
purchase of leases on which there is a Red River oil and gas development
prospect.  In return, Mr. Angerer was issued 14,400,000 Rule 144
restricted shares of the Company’s common stock and provided an option to
further fund the Company under specific terms.


12


COASTAL
CARIBBEAN OILS & MINERALS, LTD.


FORM
10-Q


PART
I - FINANCIAL INFORMATION





June
30, 2010





ITEM 2
            Management's
      Discussion and Analysis of Financial Condition
      andResults
      of Operations(Continued)





Mr.
Angerer may exercise up to four options by paying $3 million for each option
beginning three months after the date of the agreement and thereafter in three
month intervals.  In return for the funding, Mr. Angerer would earn up
to a total of 36% of the Company’s operations in North Dakota and Montana in
increments per exercised option and a 20% interest in Coastal
Petroleum.  There is also one extension available to extend the time
to exercise the first option for three months in exchange for the payment of
$50,000, which was exercised April 29, 2010. The time period for exercising the
option has since passed and the agreement is no longer in place, however, Mr.
Angerer and the Company continue to discuss funding of the Company.





Simultaneous
with this transaction, Mr. Angerer resigned as the Vice President of both the
Company and Coastal, but will remain as a Director and the Chairman of the Board
of Directors for both the Company and Coastal.  We continue to search
for capital while Mr. Angerer’s option remains unexercised, in order to secure
capital to fund our Drilling Program.  The Drilling Program is
separate from the agreements described below.




Liquidity and Capital Resources





Liquidity





The Company had no available cash,
excluding certificate of deposits pledged for drilling permits, at June 30,
2010, and December 31, 2009.  Our current liabilities exceed our
current assets by approximately $1,022,000 at June 30, 2010.  We have
suspended payments to our directors, general legal counsel, and employee since
the second quarter of 2007 and have accrued approximately $884,000 in expenses
to them as of June 30, 2010.  We expect to continue to suspend
payments to these parties until sufficient funding can be secured to resume
exploration operations and cover normal operating expenses.  In
January 2010, we received $290,000 in cash from Mr. Angerer and forgiveness of
$171,500 of amounts owed to him or credits for amounts remaining to be paid to
acquire leases, in exchange for the issuance of common stock and an option to
further fund the Company.  In April 2010, we received $50,000 from the
exercise of this contract extension from Mr. Angerer.  In June 2010,
we received $20,000 from the sale of common stock which was applied to lease
payments of approximately $27,398 that were due and were paid in June
2010.  Our next lease rental payments are due on October 1, 2010, in
the amount of $20,550.





We are
actively engaged in pursuing funding for our Drilling Program.  The
Program is an aggressive $9,500,000 exploration operation which would allow us
to explore the potential of each of the areas we hold under lease. The Drilling
Program covers exploration in three areas: a development Red River Formation
prospect in Slope County, North Dakota, on approximately 400 acres we acquired;
the drilling of three Lodgepole Formation prospects we have on our North Dakota
Leases; and twelve step out wells from the Federal 1-19 well on the Starbuck
East prospect in Montana.  The Company is proceeding with the
relatively inexpensive process of permitting wells in its main block of leases
in Valley County, Montana, in order to accommodate the drilling of the expected
wells.


13


COASTAL
CARIBBEAN OILS & MINERALS, LTD.


FORM
10-Q


PART
I - FINANCIAL INFORMATION





June
30, 2010





ITEM 2
            Management's
      Discussion and Analysis of Financial Condition
      andResults
      of Operations(Continued)




As
of June 30, 2010, we had no revenues, had recurring losses prior to 2005 and
since 2005, and had an accumulated deficit during the development
stage.  Our current cash position is not adequate to fund existing
operations or exploration and development of its oil and gas
properties.  These situations raise substantial doubt about our
ability to continue as a going concern.





Capital
Resources





In North Dakota, we control the working
interest on approximately 8,510 net acres in Slope, Billings, and Stark
Counties, on which a number of drillable prospects have been mapped to
date.  The depth of wells in North Dakota is greater than in Montana
(approximately 9,500 feet versus approximately 5,000 feet), and thus the cost of
drilling is higher.  A typical North Dakota wildcat well costs about
$1.75 million to drill.  We had originally intended to bring in others
to share the risk and investment in wells it drills in North Dakota until the
Company is in a stronger financial position, but are now actively seeking
funding to allow us to begin such exploration on our own.





If our funding efforts are successful,
we plan to drill or participate in as many as sixteen exploratory wells under
our Drilling Plan.  However, the number of wells that we drill in 2010
and their cost will be subject to various factors, including whether or not we
can obtain sufficient funding to carry out the Drilling Program, the
availability of drilling rigs that we can hire and whether we drill alone or
with other participants.  In addition, we could reduce the number of
wells that we drill if oil and natural gas prices were to decline
significantly.  We expect the cost of drilling the sixteen wells to
depend upon many factors, including those above, which may affect the cost of
operations and whether and to what extent others participate with the
Company.





We expect to continue to participate
with others or to obtain sufficient funding to allow us to drill additional
wells both in Montana and North Dakota on our own.





Results of Operations





Six months ended June 30,
2010 vs. June 30, 2009





We did not conduct drilling activities
in 2010 or 2009.  Our efforts have been focused on soliciting funding
or potential partners for our Drilling Program.  We reduced our legal
fees by $36,000 per quarter beginning June 1, 2009, and our director’s fee
expense by $12,500 per quarter effective April 1, 2009.  Therefore,
our expenses are primarily administrative and our 2010 expenses remained
consistent with 2009 amounts.


14


COASTAL
CARIBBEAN OILS & MINERALS, LTD.


FORM
10-Q


PART
I - FINANCIAL INFORMATION





June
30, 2010





ITEM 2
            Management's
      Discussion and Analysis of Financial Condition
      andResults
      of Operations(Continued)


Three months ended June 30,
2010 vs. June 30, 2009





We did not conduct drilling activities
in the second quarter of 2010 or 2009.  Our efforts have been focused
on soliciting funding or potential partners for our Drilling
Program.  We reduced our legal fees by $36,000 per quarter beginning
June 1, 2009, and our director’s fee expense by $12,500 per quarter effective
April 1, 2009.  Therefore, our expenses are primarily administrative
and our 2010 expenses remained consistent with 2009 amounts.





ITEM
3        Quantitative and Qualitative
Disclosure About Market Risk





The Company does not have any
significant exposure to market risk as there were no investments in marketable
securities at June 30, 2010.





ITEM
4        Controls and
Procedures





a.
              Management’s
      annual report on internal control over financial
      reporting.





We
maintain controls and procedures designed to ensure that information required to
be disclosed in the reports that the Company files or submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the Securities and
Exchange Commission.  Our Chief Executive Officer and our Chief
Financial Officer, after evaluating the effectiveness of our “disclosure
controls and procedures” (as defined in the Securities Exchange Act of 1934 (the
“Exchange Act”) Rules 13a-15(e) or 15d-15(e)) as of the end of the period
covered by this quarterly report, have concluded that our disclosure controls
and procedures are effective based on their evaluation of these controls and
procedures required by paragraph (b) of Exchange Act Rules 13a-15 or
15d-15.





b.
            Changes
      in internal controls. The Company made no changes in its internal
      control over financial reporting that occurred during the Company’s first
      fiscal quarter that has materially affected, or which is reasonably likely
      to materially affect the Company’s internal control over financial
      reporting.





c.
            Limitations
      on the Effectiveness of Controls  Our
      management, including our ChiefExecutive
      and Chief Financial Officer, does not expect that our disclosure controls
      and internal controls will prevent all error and all fraud. A control
      system, no matter how well conceived and operated, can provide only
      reasonable, not absolute, assurance that the objectives of the control
      system are met. Further, the design of a control system must reflect the
      fact that there are resource constraints, and the benefits of controls
      must be considered relative to their costs. Because of the inherent
      limitations in all control systems, no evaluation of controls can provide
      absolute assurance that all control issues and instances of fraud, if any,
      within the Company have been detected. These inherent limitations include
      the realities that judgments in decision-making can be faulty, and that
      breakdowns can occur because of simple error or mistake. Additionally,
      controls can be circumvented by the individual acts of some persons, by
      collusion of two or more people, or by management override of the
      control.


15


COASTAL
CARIBBEAN OILS & MINERALS, LTD.


FORM
10-Q


PART
I - FINANCIAL INFORMATION





June
30, 2010




The design of any system of controls
also is based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving
its stated goals under all potential future conditions; over time, controls may
become inadequate because of changes in conditions, or the degree of compliance
with the policies or procedures may deteriorate. Because of the inherent
limitations in a cost-effective control system, misstatements due to error or
fraud may occur and not be detected.


16


COASTAL
CARIBBEAN OILS & MINERALS, LTD.


FORM
10-Q


PART
II - OTHER INFORMATION





June
30, 2010





ITEM
1        Legal
Proceedings





During the third quarter of 2009, the
Company was involved as a defendant in a case entitled American Pipe & Supply Co. v.
Coastal Petroleum Company, et.al, Cause No. DV 08-63, in the Montana
Seventeenth Judicial District Court in Valley County, Montana. This claim is in
relation to the failure of our farmee, F-Cross, who has filed for bankruptcy, to
pay for pipe purchased from the Plaintiff to drill the State 7-16 well. The
claim seeks relief against Coastal Petroleum: to foreclose an oil and gas lien
on the single part of one lease involved which is held in Coastal Petroleum’s
name; and damages for breach of contract and quantum meruit in the amount of
about $80,000. Because the farmee has filed bankruptcy the proceeding is in
abeyance. Coastal Petroleum has filed an answer and its counsel advises it is
likely that only the claim to foreclose the lien should withstand a motion for
summary judgment by Coastal Petroleum. While it is likely that the Plaintiff
will obtain the lien, this lien would only apply to the small area under that
specific lease that was drilled.





Except as described in the preceding
paragraph, to the best knowledge of our management, there are no material
litigation matters pending or threatened against us.





ITEM
5        Other
Information





The Internal Revenue Code of 1986, as
amended, provides special rules for distributions received by U.S. holders on
stock of a passive foreign investment company (PFIC), as well as amounts
received from the sale or other disposition of PFIC stock.  Under the
PFIC rules, a non-U.S. corporation will be classified as a PFIC for U.S. federal
income tax purposes in any taxable year in which, after applying certain
look-through rules, either (1) at least 75 percent of its gross income is
passive income or (2) at least 50 percent of the gross value of its assets is
attributable to assets that produce passive income or are held for the
production of passive income.





The Company believes that it would not
be classified as a PFIC for the year 2009, because it derived the majority of
its gross income in 2009 from the sale of interests in parts of its leases to
other companies through farm-out agreements, and received a relatively small
amount of interest the Company.  However, the Company may have been
considered a PFIC in previous years, which could result in negative tax
consequences to a shareholder.  The determination of whether the
Company will be considered a PFIC for United States federal income tax purposes
is an annual determination that cannot be made until the close of the fiscal
year.  Also, how the Company was classified last year does not affect
how it will be classified this year.


17


COASTAL
CARIBBEAN OILS & MINERALS, LTD.


FORM
10-Q


PART
II - OTHER INFORMATION





June
30, 2010





If, for any taxable year, the Company’s
passive income or assets that produce passive income exceed levels provided by
U.S. law, the Company would be a "passive foreign investment company," or PFIC,
for U.S. federal income tax purposes.  For the years 1987 through 2004
and in 2006, Coastal Caribbean's passive income and assets that produce passive
income exceeded those levels and for those years Coastal Caribbean constituted a
PFIC.  If Coastal Caribbean is a PFIC for any taxable year, then the
Company’s U.S. shareholders potentially would be subject to adverse U.S. tax
consequences of holding and disposing of shares of our common stock for that
year and for future tax years.  Any gain from the sale of, and certain
distributions with respect to, shares of the Company’s common stock, would cause
a U.S. holder to become liable for U.S. federal income tax under section 1291 of
the Internal Revenue Code (the interest charge regime).  The tax is
computed by allocating the amount of the gain on the sale or the amount of the
distribution, as the case may be, to each day in the U.S. shareholder’s holding
period.  To the extent that the amount is allocated to a year, other
than the year of the disposition or distribution, in which the corporation was
treated as a PFIC with respect to the U.S. holder, the income will be taxed as
ordinary income at the highest rate in effect for that year, plus an interest
charge.





For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company’s Annual Report on Form 10-K for the year ended December 31,
2009.





ITEM
6        Exhibits




31.1
              Certification
      pursuant to Rule 13a-14 by Phillip W.
Ware




32.1
            Certification
      pursuant to Section 906 by Phillip W.
Ware




18





COASTAL
CARIBBEAN OILS & MINERALS, LTD.


FORM
10-Q


June
30, 2010





SIGNATURES





Pursuant to the requirements 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.RegistrantDate:  August
      13, 2010
                  By
                  /s/ Phillip W. WarePhillip
      W. WareChief
      Executive Officer,President
      and Treasurer




19