**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  **March
      31,
      2007**





o
            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.**








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





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





(850)
      653-2732














Indicate
      by check mark whether the registrant (l) has filed all reports required to
      be
      filed by Section 13 or 15 (d) of the Securities Exchange Act of l934 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. T Yes  ̈ No





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


Large
      accelerated filer  ̈    Accelerated
      filer  ̈    Non-accelerated
      filer T




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




The
      number of shares outstanding of the issuer's single class of common stock as
      of
      November 9, 2006 was 46,211,604.









**COASTAL
      CARIBBEAN OILS & MINERALS, LTD.**


**FORM
      10-Q**




**March 31,
      2007**





**Table
      of Contents**




**PART
      I - FINANCIAL INFORMATION**





ITEM
                1
            Financial
                Statements
            PageConsolidated
                balance sheets at March 31, 2007 and December 31, 2006
            3Consolidated
                statements of operations for the three month periods ended March 31,
                2007 and 2006 and for the period from January 31, 1953 (inception)
                to
                March 31, 2007
            4Consolidated
                statements of cash flows for the three month periods ended March
                31, 2007
                and 2006 and for the period from January 31, 1953 (inception) to
                March 31, 2007
            5Notes
                to consolidated financial statements
            6ITEM
                2
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            9ITEM
                3
            Quantitative
                and Qualitative Disclosure About Market Risk
            11ITEM
                4
            Controls
                and Procedures
            11**PART
                II - OTHER INFORMATION**ITEM
                5
            Other
                Information
            12ITEM
                6
            Exhibits
            13Signatures
            14




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




March
                31, 2007
            
            December
                31, 2006**Assets**
            
            (Unaudited)
            
            (Note)Current
                assets:Cash
                and cash equivalents
            
            $
            155,840
            
            $
            342,541Prepaid
                expenses and other
            
            
            19,504
            
            
            29,255Total
                current assets
            
            
            175,344
            
            
            371,796Certificates
                of deposit
            
            
            126,313
            
            
            126,313Petroleum
                leases
            
            
            2,268,670
            
            
            2,199,809Equipment,
                net
            
            
            10,825
            
            
            11,455Total
                assets
            
            $
            2,581,152
            
            $
            2,709,373**Liabilities
                and Shareholders’ Equity**Current
                liabilities:Accounts
                payable and accrued liabilities
            
            $
            44,141
            
            $
            5,322Total
                current liabilities
            
            
            44,141
            
            
            5,322Shareholders'
                equityCommon
                stock, par value $.12 per share:Authorized
                - 250,000,000 sharesOutstanding
                - 46,211,604 shares
            
            
            5,545,392
            
            
            5,545,392Capital
                in excess of par value
            
            
            32,137,811
            
            
            32,137,81137,683,203
            
            
            37,683,203Deficit
                accumulated during the development stage
            
            
            (35,146,192
            )
            
            (34,979,152
            )Total
                shareholders’ equity
            
            
            2,537,011
            
            
            2,704,051Total
                liabilities and shareholders’ equity
            
            $
            2,581,152
            
            $
            2,709,373




Note:
      The
      balance sheet at December 31, 2006 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)





Three
                months endedMarch
                31,
            
            For
                the period from Jan. 31, 1953 (inception) to March 31,20072007
            
            2006**Interest
                and other income**
            
            $
            1,194
            
            $
            15,243
            
            $
            3,970,838**Gain
                on settlement**
            
            
            -
            
            
            -
            
            
            8,124,0161,194
            
            
            15,243
            
            
            12,094,854**Expenses:**Legal
                fees and costs
            
            
            52,691
            
            
            46,083
            
            
            17,311,927Administrative
                expenses
            
            
            66,913
            
            
            116,374
            
            
            10,318,196Salaries
            
            
            39,050
            
            
            31,250
            
            
            4,050,081Shareholder
                communications
            
            
            9,580
            
            
            3,251
            
            
            4,103,090Goodwill
                impairment
            
            
            -
            
            
            -
            
            
            801,823Write
                off of unproved properties
            
            
            -
            
            
            -
            
            
            6,578,929Exploration
                costs
            
            
            -
            
            
            -
            
            
            247,465Lawsuit
                judgments
            
            
            -
            
            
            -
            
            
            1,941,916Minority
                interests
            
            
            -
            
            
            -
            
            
            (632,974
            )Other
            
            
            -
            
            
            -
            
            
            364,865Contractual
                services
            
            
            -
            
            
            -
            
            
            2,155,728168,234
            
            
            196,958
            
            
            47,241,046**Net
                loss**
            
            $
            (167,040
            )
            $
            (181,715
            )Deficit
                accumulated during the development stage
            
            
            
            
            
            
            
            $
            (35,146,192
            )Average
                number of shares outstanding (basic & diluted)
            
            
            46,211,604
            
            
            46,211,604Net
                loss per share (basic & diluted)
            
            $
            (.004
            )
            $
            (.004
            )




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)




Three
                months ended March 31,
            
            For
                the period from Jan. 31, 1953 (inception) To2007
            
            2006
            
            March
                31, 2007**Operating
                activities:**Net
                loss
            
            $
            (167,040
            )
            $
            (181,715
            )
            $
            (35,146,192
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Gain
                on settlement
            
            
            -
            
            
            -
            
            
            (8,124,016
            )Goodwill
                impairment
            
            
            -
            
            
            -
            
            
            801,823Minority
                interest
            
            
            -
            
            
            -
            
            
            (632,974
            )Depreciation
            
            
            630
            
            
            -
            
            
            2,148Write
                off of unproved properties
            
            
            -
            
            
            -
            
            
            6,638,176Common
                stock issued for services
            
            
            -
            
            
            -
            
            
            119,500Compensation
                recognized for stock option grant
            
            
            -
            
            
            -
            
            
            75,000Recoveries
                from previously written off properties
            
            
            -
            
            
            -
            
            
            252,173Net
                change in:Prepaid
                expenses and other
            
            
            9,751
            
            
            176,457
            
            
            (19,505
            )Inventory
                - drilling
            
            
            -
            
            
            (21,968
            )
            
            -Accrued
                liabilities
            
            
            38,819
            
            
            95,626
            
            
            44,143Income
                taxes payable
            
            
            -
            
            
            (35,000
            )
            
            -Net
                cash provided by (used in) operating activities
            
            
            (117,840
            )
            
            33,400
            
            
            (35,989,724
            )**Investing
                activities:**Additions
                to oil, gas, and mineral properties net of assets acquired for common
                stock and reimbursements
            
            
            (68,861
            )
            
            (86,952
            )
            
            (6,008,852
            )Well
                drilling costs
            
            
            -
            
            
            (520,069
            )
            
            (1,018,435
            )Net
                proceeds from settlement
            
            
            -
            
            
            -
            
            
            8,124,016Proceeds
                from relinquishment of surface rights
            
            
            -
            
            
            -
            
            
            246,733Purchase
                of certificate of deposit
            
            
            -
            
            
            -
            
            
            (126,313
            )Purchase
                of minority interest in CPC
            
            
            -
            
            
            -
            
            
            (801,823
            )Purchase
                of fixed assets
            
            
            -
            
            
            -
            
            
            (74,623
            )Net
                cash provided by (used in) investing activities
            
            
            (68,861
            )
            
            (607,021
            )
            
            340,703**Financing
                activities:**Loans
                from officers
            
            
            -
            
            
            -
            
            
            111,790Repayment
                of loans from officers
            
            
            -
            
            
            -
            
            
            (111,790
            )Sale
                of common stock net of expenses
            
            
            -
            
            
            -
            
            
            30,380,612Shares
                issued upon exercise of options
            
            
            -
            
            
            -
            
            
            884,249Sale
                of shares by subsidiary
            
            
            -
            
            
            -
            
            
            820,000Sale
                of subsidiary shares
            
            
            -
            
            
            -
            
            
            3,720,000Net
                cash provided by financing activities
            
            
            -
            
            
            -
            
            
            35,804,861Net
                (decrease) increase in cash and cash equivalents
            
            
            (186,701
            )
            
            (573,621
            )
            
            155,840Cash
                and cash equivalents at beginning of period
            
            
            342,541
            
            
            2,250,236
            
            
            -Cash
                and cash equivalents at end of period
            
            $
            155,840
            
            $
            1,676,615
            
            $
            155,840





See
      accompanying notes.




5




**COASTAL
      CARIBBEAN OILS & MINERALS, LTD.**


**FORM
      10-Q**


**PART
      I - FINANCIAL INFORMATION**





**ITEM
      1**   **Financial
      Statements**





Note
      1.  Basis
      of Presentation





The
      accompanying unaudited consolidated financial statements include Coastal
      Caribbean Oils & Minerals, Ltd. (the Company), its wholly owned subsidiary,
      Coastal Petroleum Company (Coastal Petroleum) and Coastal Petroleum’s wholly
      owned subsidiary, Williston Basin, Inc., 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 month period ended March
      31,
      2007 are not necessarily indicative of the results that may be expected for
      the
      year ending December 31, 2007. 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,
      2006.




Note
      2.  Going
      Concern





As
      of
      March 31, 2007, 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. Management is exploring options to sell interests in its leases
      or
      team with others for oil and gas exploration and development activity, although
      there no assurance these efforts will be successful. These situations raise
      substantial doubt about the Company's ability to continue as a going concern.
      These 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
      income (loss) per share





Net
      income (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.





Note
      4.  Oil
      & Gas Development Activity





Drilling
      Activity





Currently
      the Company is not drilling any wells.





The
      Company began drilling its initial well in north central Montana in January
      2006
      under a farm-in agreement with the mineral owner on acreage in Blaine County.
      The well hit the target Lodgepole reef, but the reef had been flushed with
      fresh
      water. Several other formations were drilled through that were prospective
      for
      oil or gas and each of them has been tested. While gas was encountered in the
      testing, the well did not contain economic quantities of oil or gas. The Company
      expensed $800,000 in drilling costs related to this well in the fourth quarter
      of 2006. This well will be abandoned by the Company.




6




**COASTAL
      CARIBBEAN OILS & MINERALS, LTD.**


**FORM
      10-Q**


**PART
      I - FINANCIAL INFORMATION**





**ITEM
      1**  **Financial
      Statements** **** (Continued)





Note
      4.  Oil
      & Gas Development Activity (Continued)





The
      Company has also participated in and acted as operator in a twin well to the
      only known well to produce from the Lodgepole in Montana. The targeted Lodgepole
      reef contained oil, but not in sufficient quantities to be commercial for the
      Company. Likewise, an uphole test of the Mission Canyon Formation resulted
      in
      oil being encountered, but not in sufficient quantities to be commercial for
      the
      Company. The Company’s participation costs in the twin well were approximately
      $225,000, which was expensed in the fourth quarter of 2006. The total cost
      of
      the well was approximately $1,260,000. This well will be abandoned by the
      participants with the Company acting as operator until abandonment is
      completed.





**Montana
      Leases**





The
      Company’s primary presence in Montana is in Valley County, where it holds leases
      covering 137,163.26 net acres, which the Company acquired in three separate
      acquisitions between July 2005 and February 2006. 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 109,423.26
      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
      2007
      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 has an agreement with a consultant entity, controlled by one of the
      Company’s Directors, to identify Mississippian Lodgepole Reef prospects to be
      drilled on and near its Valley County Leases. Previously under the agreement,
      the Company was required to drill a test well on an identified Lodgepole Reef
      prospect by a certain deadline, however, there is no longer a drilling
      obligation under the agreement.





The
      Company’s Letter of Intent with Victory Energy Corporation (Victory) has expired
      and the Company is currently looking to team with another entity to explore
      the
      Company’s leases. Under the Letter of Intent, Victory had agreed to complete and
      execute a Formal Agreement within 60 days and to pay the Company $250,000 upon
      the execution of that Formal





7





**COASTAL
      CARIBBEAN OILS & MINERALS, LTD.**


**FORM
      10-Q**


**PART
      I - FINANCIAL INFORMATION**





**ITEM
      1**  **Financial
      Statements** **** (Continued)





Note
      4.  Oil
      & Gas Development Activity (Continued)





Agreement.
      The 60 days expired and instead of executing the Agreement, Victory requested
      an
      extension, but could give the Company no assurances that it would be able to
      complete the transaction even with the extension. Therefore, an agreement could
      not be reached regarding an extension of the time to execute the Formal
      Agreement and the Letter of Intent expired. The two Companies have parted ways
      and Coastal has begun discussions with other entities regarding the exploration
      of its leases.





The
      Company has already begun the permitting process for drilling on a 34,000 acre
      shallow natural gas prospect on its Montana leases. This prospect alone is
      of
      interest to independent oil and gas companies and the initial well to test
      the
      prospect would be less than the cost of a Lodgepole test well, since it is
      not
      as deep.





**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. Since that time,
      some of the leases have expired and the Company currently holds leases on
      9,388.94 gross and 9,150.31 net acres in Slope County. The Company is obligated
      to drill a test well before June 1, 2007, and has the option to drill the
      remaining Lodgepole Reef prospects on these leases. The Company intends to
      partner 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 $1,200,000.





Note
      5.  Income
      Taxes





For
      the
      three months ended March 31, 2007 and 2006, 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 has approximately $10,000,000 in
      net
      operating loss carryforwards at December 31, 2006.





Note
      6.  Related
      Party Transactions





Pursuant
      to a written agreement with respect to the Valley County Leases, the Company
      uses an entity controlled by an individual who is a shareholder, officer and
      director of the company to perform geotechnical analysis of potential drilling
      sites at a cost of $1,000 per site. The Company paid no amounts to this entity
      for the three months ended March 31, 2007 and 2006, respectively.





The
      Company pays a monthly retainer to the law firm of Angerer & Angerer. The
      principals of the law firm include two individuals who are collectively
      shareholders, officers and a director of the Company. The Company expensed
      $36,000 and $36,000 in legal fees for the three months ended March 31, 2007
      and
      2006, respectively.




8




**COASTAL
      CARIBBEAN OILS & MINERALS, LTD.**


**FORM
      10-Q**


**PART
      I - FINANCIAL INFORMATION**





**ITEM
      1**  **Financial
      Statements** **** (Continued)





The
      Company has retained the law firm of Igler & Dougherty, P.A. as securities
      counsel. One of the Company’s directors is a shareholder in the law firm. The
      Company has expensed $4,038 and $8,633 in legal fees and costs for the three
      months ended March 31, 2007 and 2006, respectively.








**ITEM
      2**   **Management's
      Discussion and Analysis of Financial Condition and**


**** **Results
      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 financing 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.





**Liquidity and Capital Resources**


**Liquidity**




The
      Company has $156,000 in available cash, excluding certificate of deposits
      pledged for drilling permits, at March 31, 2007 compared to $343,000 at December
      31, 2006. The Company is current with all its vendors and has no loans
      outstanding. The Company has lease payments totaling approximately $125,000
      due
      in June 2007.





9





**COASTAL
      CARIBBEAN OILS & MINERALS, LTD.**


**FORM
      10-Q**


**PART
      I - FINANCIAL INFORMATION**





**ITEM
      2**  **Management's
      Discussion and Analysis of Financial Condition and**


**Results
      of Operations** **** (Continued)




As
      of March
      31,
      2007 ,
      the
      Company had no revenues, had recurring losses prior to 2005
      and
      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. Management is exploring options
      to
      sell interests in its leases or team with others for oil and gas exploration
      and
      development activity, although there no assurance these efforts will be
      successful. These situations raise substantial doubt about the Company's ability
      to continue as a going concern.




The
      Company acquired oil and gas leasing rights for 25,000 acres in Slope County
      North Dakota and for two well sites in Valley County, Montana for $100,000
      from
      an entity controlled by one of the Company’s directors. Since that time, some of
      the leases have expired and the Company currently holds leases on 9,150.31
      net
      acres in Billings, Slope and Stark Counties. The leases include an option to
      drill for additional prospects in the Valley County area. The leases provide
      for
      a 25% working interest, 20% net revenue interest in each well, on a well by
      well
      basis, to an entity controlled by one of the Company’s directors. The leases are
      also subject to the overriding royalty interest of the landowner. The Company
      does not expect to drill on these leases on its own within the next twelve
      months, but will look to team with another entity to share the costs of such
      drilling.





The
      Company now holds leases in Valley County covering a total of 137,163.26 net
      acres. The Company has received four permits to drill on its Valley County
      Leases and is in the process of obtaining additional permits, including a permit
      to drill a test well into the Company’s 34,000 acre shallow natural gas
      prospect. The Company continues to seek others to team with and share the cost
      of wells it intends to drill over the next year.





The
      Company began drilling its initial well in north central Montana in January
      2006
      under a farm-in agreement with the mineral owner on acreage in Blaine County.
      The well hit the target Lodgepole reef, but the reef had been flushed with
      fresh
      water. Several other formations were drilled through that were prospective
      for
      oil or gas and each of them has been tested. While gas was encountered in the
      testing, the well did not contain economic quantities of oil or gas. The Company
      expensed $800,000 in drilling costs related to this well in the fourth quarter
      of 2006. The Company will abandon this well.





The
      Company has also participated in and acted as operator in a twin well to the
      only known well to produce from the Lodgepole in Montana. The targeted Lodgepole
      reef contained oil, but not in sufficient quantities to be commercial for the
      Company. Likewise, an uphole test of the Mission Canyon Formation resulted
      in
      oil being encountered, but not in sufficient quantities to be commercial for
      the
      Company. The Company’s participation costs in the twin well were approximately
      $225,000, which was expensed in the fourth quarter of 2006. The total cost
      of
      the well was approximately $1,260,000.




10




**COASTAL
      CARIBBEAN OILS & MINERALS, LTD.**


**FORM
      10-Q**


**PART
      I - FINANCIAL INFORMATION**





**ITEM
      2**  **Management's
      Discussion and Analysis of Financial Condition and**


**Results
      of Operations** **** (Continued)





**Results of Operations**





**Three
      months ended March 31, 2007 vs. March 31, 2006**





In
      2005
      we acquired oil and gas leases in North Dakota and Montana and we began drilling
      our first well in January 2006.





Our
      interest income decreased in 2007 from 2006 due to lower cash
      balances.





During
      2007, our travel and lodging and other expenses decreased due to the cessation
      of drilling activities in North Dakota and Montana from 2006 levels when we
      were
      engaged in well drilling activities.








**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 March 31, 2007.








**ITEM
      4**  **Controls
      and Procedures**





I,
      Phillip W. Ware, the principal executive officer and the principal financial
      officer, have evaluated the Company’s
      disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c)
      adopted under the Securities Act of 1934) as of the end of the period covered
      by
      this report and have concluded:





1.  That
      the
      Company’s disclosure controls and procedures are effective and adequately
      designed to ensure that material information relating to the Company, including
      its consolidated subsidiary, is timely made known to such officers by others
      within the Company and its subsidiary, particularly during the period in which
      this quarterly report is being prepared; and





2.  That
      there were no significant changes in the Company’s internal controls or in other
      factors that could materially affect or are reasonably likely to materially
      affect these controls subsequent to the date of their evaluation, including
      any
      corrective actions with regard to significant deficiencies and material
      weaknesses.





11





**COASTAL
      CARIBBEAN OILS & MINERALS, LTD.**


**FORM
      10-Q**


**PART
      II - OTHER INFORMATION**





**March
      31, 2007**





**ITEM
      5**  **Other
      Information**




Coastal
      Caribbean is currently a passive foreign investment company, or PFIC, for United
      States federal income tax purposes, which could result in negative tax
      consequences to a shareholder. 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 2001, 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, 2006.





12




**COASTAL
      CARIBBEAN OILS & MINERALS, LTD.**


**FORM
      10-Q**


**PART
      II - OTHER INFORMATION**





**March
      31, 2007**




**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





13




**COASTAL
      CARIBBEAN OILS & MINERALS, LTD.**


**FORM
      10-Q**


**March
      31, 2007**




**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:
              May 10, 2007
            By:
            /s/ Phillip
              W. WarePhillip
              W. WareChief
                Executive Officer,
              President
                and
                Treasurer




14