**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C. 20549**

**FORM      10-Q**

| x | QUARTERLY                    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES                    EXCHANGE ACT OF 1934 |
|---|-------------------------------------------------------------------------------------------------------------------------------|

**September      30,      2006                    **

| o | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934 |
|---|---------------------------------------------------------------------------------------------------------------------------------------|

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

| BERMUDA                                                            |   | NONE                                 |
|--------------------------------------------------------------------|--------|--------------------------------------|
| (State                  or other jurisdiction of                   |   | (I.R.S.                  Employer    |
| incorporation                  or organization)                    |   | Identification                  No.) |
|                                                               |   |                                 |
| Clarendon                  House, Church Street, Hamilton, Bermuda |   | HM                  11               |
| (Address                  of principal executive offices)          |   | (Zip                  Code)          |

----

----

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

**FORM      10-Q **

**SEPTEMBER      30, 2006**

**Table      of Contents**

**PART      I - FINANCIAL INFORMATION**

|                  |                                                                                                                                                                                                                                                     |   | **Page** |
|-----------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|
| ITEM                1 | Financial                Statements                                                                                                                                                                                                                      |   |          |
|                  |                                                                                                                                                                                                                                                     |   |     |
|                  | Consolidated                balance sheets at September 30, 2006 and December 31, 2005                                                                                                                                                                   |   | 3        |
|                  |                                                                                                                                                                                                                                                     |   |     |
|                  | Consolidated                statements of operations for the three and nine month periods ended                September 30, 2006 and 2005 and for the period from January 31, 1953                (inception) to September 30, 2006                     |   |  4  |
|                  |                                                                                                                                                                                                                                                     |   |     |
|                  | Consolidated                statements of cash flows for the nine month periods ended September                30,                2006 and 2005 and for the period from January 31, 1953 (inception)                to                September 30, 2006 |   |  5  |
|                  |                                                                                                                                                                                                                                                     |   |     |
|                  | Notes                to consolidated financial statements                                                                                                                                                                                                |   | 6        |
|                  |                                                                                                                                                                                                                                                     |   |     |
| ITEM                2 | Management's                Discussion and Analysis of Financial Condition and Results of                Operations                                                                                                                                      |   | 10       |
|                  |                                                                                                                                                                                                                                                     |   |     |
| ITEM                3 | Quantitative                and Qualitative Disclosure About Market Risk                                                                                                                                                                                 |   | 13       |
|                  |                                                                                                                                                                                                                                                     |   |     |
| ITEM                4 | Controls                and Procedures                                                                                                                                                                                                                   |   | 14       |
|                  |                                                                                                                                                                                                                                                     |   |     |
|                  |                                                                                                                                                                                                                                                     |   |     |
|                  | **PART                II - OTHER INFORMATION**                                                                                                                                                                                                           |   |     |
|                  |                                                                                                                                                                                                                                                     |   |     |
| ITEM                5 | Other                Information                                                                                                                                                                                                                         |   | 15       |
|                  |                                                                                                                                                                                                                                                     |   |     |
| ITEM                6 | Exhibits                                                                                                                                                                                                                                                 |   | 16       |
|                  |                                                                                                                                                                                                                                                     |   |     |
|                  | Signatures                                                                                                                                                                                                                                               |   | 17       |

----

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

**FORM      10-Q**

**PART      I - FINANCIAL INFORMATION**

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

**CONSOLIDATED      BALANCE SHEETS**

|                                                            |   | September                30, |        | December                31, |   |
|-----------------------------------------------------------------|--------|------------------------------|-------------|-----------------------------|--------|
|                                                            |   | 2006                         |        | 2005                        |   |
| **Assets**                                                      |   | (Unaudited)                  |        | (Note)                      |   |
| Current                assets:                                  |   |                         |        |                        |   |
| Cash                and cash equivalents                        |   | $                            | 641,545     |                        | $      | 2,250,236 |   |
| Income                taxes receivable                          |   |                         | 35,000      |                        |   | - |   |
| Prepaid                expenses and other                       |   |                         | -           |                        |   | 199,754 |   |
| Total                current assets                             |   |                         | 676,545     |                        |   | 2,449,990 |   |
|                                                            |   |                         |        |                        |   |   |   |
| Certificate                of deposit                           |   |                         | 125,830     |                        |   | 75,000 |   |
| Well                drilling costs                              |   |                         | 961,698     |                        |   | - |   |
| Petroleum                leases                                 |   |                         | 2,122,384   |                        |   | 1,860,614 |   |
| Equipment,                net                                   |   |                         | 10,234      |                        |   | 1,771 |   |
|                                                            |   |                         |        |                        |   |   |   |
| Total                assets                                     |   | $                            | 3,896,691   |                        | $      | 4,387,375 |   |
|                                                            |   |                         |        |                        |   |   |   |
| **Liabilities                and Shareholders’ Equity**   |   |                         |        |                        |   |   |   |
|                                                            |   |                         |        |                        |   |   |   |
| Current                liabilities:                             |   |                         |        |                        |   |   |   |
| Accounts                payable and accrued liabilities         |   | $                            | 56,408      |                        | $      | 27,526 |   |
| Income                taxes payable                             |   |                         | -           |                        |   | 35,000 |   |
| Total                current liabilities                        |   |                         | 56,408      |                        |   | 62,526 |   |
|                                                            |   |                         |        |                        |   |   |   |
| Shareholders'                equity                             |   |                         |        |                        |   |   |   |
| Common                stock, par value $.12 per share:          |   |                         |        |                        |   |   |   |
| Authorized                - 250,000,000 shares                  |   |                         |        |                        |   |   |   |
| Outstanding                - 46,211,604, respectively           |   |                         | 5,545,392   |                        |   | 5,545,392 |   |
| Capital                in excess of par value                   |   |                         | 32,137,811  |                        |   | 32,137,811 |   |
|                                                            |   |                         | 37,683,203  |                        |   | 37,683,203 |   |
| Deficit                accumulated during the development stage |   |                         | (33,842,920 | )                           |   | (33,358,354 | ) |
| Total                shareholders’ equity                 |   |                         | 3,840,283   |                        |   | 4,324,849 |   |
| Total                liabilities and shareholders’ equity |   | $                            | 3,896,691   |                        | $      | 4,387,375 |   |

----

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

**FORM      10-Q**

**PART      I - FINANCIAL INFORMATION**

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

**CONSOLIDATED      STATEMENTS OF OPERATIONS**

|                                                    |   | Three                months ended September 30, |         |     Nine                months ended September 30, |   | For                      theperiod                      fromJan.                      31, 1953(inception)                      to September 30, |   |
|---------------------------------------------------------|--------|-------------------------------------------------|--------------|------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                    |   | 2006                                       |         | 2005                                               |   | 2006                                                                                                                        |   | 2005 |   | 2006 |   |
|                                                    |   |                                            |         |                                                                   |   |                                                                                                                                            |   |   |   |   |   |
| **Revenues**                                            |   | $                                               | -            |                                                                   | $      | -                                                                                                                                               |   | $ | - |   | $ | - |   | $ | - |   |
|                                                    |   |                                            |         |                                                                   |   |                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| **Expenses:**                                           |   |                                            |         |                                                                   |   |                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| Legal                fees and costs                     |   |                                            | 49,951       |                                                                   |   | 76,011                                                                                                                                          |   |   | 161,610 |   |   | 90,068 |   |   | 17,216,677 |   |
| Administrative                expenses                  |   |                                            | 75,739       |                                                                   |   | 52,320                                                                                                                                          |   |   | 272,406 |   |   | 130,811 |   |   | 10,209,946 |   |
| Personnel                                               |   |                                            | 39,050       |                                                                   |   | 44,291                                                                                                                                          |   |   | 104,150 |   |   | 93,810 |   |   | 3,971,981 |   |
| Shareholder                communications               |   |                                            | 11,924       |                                                                   |   | 12,524                                                                                                                                          |   |   | 16,776 |   |   | 24,584 |   |   | 4,092,685 |   |
| Write                off of unproved properties         |   |                                            | -            |                                                                   |   | -                                                                                                                                               |   |   | - |   |   | - |   |   | 5,560,494 |   |
| Exploration                costs                        |   |                                            | -            |                                                                   |   | -                                                                                                                                               |   |   | - |   |   | - |   |   | 247,465 |   |
| Lawsuit                judgments                        |   |                                            | -            |                                                                   |   | -                                                                                                                                               |   |   | - |   |   | - |   |   | 1,941,916 |   |
| Minority                interests                       |   |                                            | -            |                                                                   |   | -                                                                                                                                               |   |   | - |   |   | - |   |   | (632,974 | ) |
| Other                                                   |   |                                            | -            |                                                                   |   | -                                                                                                                                               |   |   | - |   |   | - |   |   | 364,865 |   |
| Contractual                services                     |   |                                            | -            |                                                                   |   | -                                                                                                                                               |   |   | - |   |   | - |   |   | 2,155,728 |   |
|                                                    |   |                                            | 176,664      |                                                                   |   | 185,146                                                                                                                                         |   |   | 554,942 |   |   | 339,273 |   |   | 45,128,783 |   |
|                                                    |   |                                            |         |                                                                   |   |                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| **Other                income (expense):**              |   |                                            |         |                                                                   |   |                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| Gain                on settlement (Note 4)              |   |                                            | -            |                                                                   |   | 8,125,900                                                                                                                                       |   |   | - |   |   | 8,125,900 |   |   | 8,124,016 |   |
| Goodwill                impairment                      |   |                                            | -            |                                                                   |   | (801,923                                                                                                                                        | )      |   | - |   |   | (801,923 | ) |   | (801,923 | ) |
| Interest                and other income                |   |                                            | 8,913        |                                                                   |   | 21,657                                                                                                                                          |   |   | 35,376 |   |   | 21,657 |   |   | 3,963,670 |   |
|                                                    |   |                                            | 8,913        |                                                                   |   | 7,345,634                                                                                                                                       |   |   | 35,376 |   |   | 7,345,634 |   |   | 11,285,863 |   |
|                                                    |   |                                            |         |                                                                   |   |                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| **Income                tax benefit (expense)**         |   |                                            | 35,000       |                                                                   |   | (35,000                                                                                                                                         | )      |   | 35,000 |   |   | (35,000 | ) |   | - |   |
|                                                    |   |                                            |         |                                                                   |   |                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| **Net                income (loss)**                    |   | **$**                                           | **(132,751** | **)**                                                                  | **$**  | **7,125,488**                                                                                                                                   |   | **$** | **(484,566** | **)** | **$** | **6,971,361** |   |   |   |   |
|                                                    |   |                                            |         |                                                                   |   |                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| Deficit                accumulated during               |   |                                            |         |                                                                   |   |                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| the                development stage                    |   |                                            |         |                                                                   |   |                                                                                                                                            |   |   |   |   |   |   |   | $ | (33,842,920 | ) |
|                                                    |   |                                            |         |                                                                   |   |                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| Weighted                average number of shares        |   |                                            |         |                                                                   |   |                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| outstanding                (basic & diluted)        |   |                                            | 46,221,604   |                                                                   |   | 46,221,604                                                                                                                                      |   |   | 46,221,604 |   |   | 46,221,604 |   |   |   |   |
|                                                    |   |                                            |         |                                                                   |   |                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| Net                loss per share (basic & diluted) |   | $                                               | (.00         | )                                                                      | $      | .15                                                                                                                                             |   | $ | (.01 | ) | $ | .15 |   |   |   |   |

----

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

**FORM      10-Q**

**PART      I - FINANCIAL INFORMATION**

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

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

|                                                                      |   | Nine                    months ended September                    30, |       | For                      the period from Jan.                      31, 1953(inception)                      to September 30, |   |
|---------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                      |   | 2006                                                                  |       | 2005                                                                                                                    |   | 2006 |   |
| **Operating                activities:**                                  |   |                                                                  |       |                                                                                                                         |   |   |   |
| Net                income (loss)                                          |   | $                                                                     | (484,566   | )                                                                                                                            | $      | 6,971,361 |   | $ | (33,842,920 | ) |
| Adjustments                to reconcile net loss to net cash              |   |                                                                  |       |                                                                                                                         |   |   |   |   |   |   |
| used                in operating activities:                              |   |                                                                  |       |                                                                                                                         |   |   |   |   |   |   |
| Goodwill                impairment                                        |   |                                                                  | -          |                                                                                                                         |   | 801,923 |   |   | 801,823 |   |
| Gain                on settlement                                         |   |                                                                  | -          |                                                                                                                         |   | (8,125,900 | ) |   | (8,124,016 | ) |
| Write                off of unproved properties                           |   |                                                                  | -          |                                                                                                                         |   | - |   |   | 5,619,741 |   |
| Depreciation                                                              |   |                                                                  | 2,100      |                                                                                                                         |   | - |   |   | 2,220 |   |
| Minority                interest                                          |   |                                                                  | -          |                                                                                                                         |   | - |   |   | (632,974 | ) |
| Common                stock issued for services                           |   |                                                                  | -          |                                                                                                                         |   | - |   |   | 119,500 |   |
| Compensation                recognized for stock option grant             |   |                                                                  | -          |                                                                                                                         |   | - |   |   | 75,000 |   |
| Recoveries                from previously written off properties          |   |                                                                  | -          |                                                                                                                         |   | - |   |   | 252,173 |   |
| Net                change in:                                             |   |                                                                  |       |                                                                                                                         |   |   |   |   |   |   |
| Income                taxes receivable                                    |   |                                                                  | (35,000    | )                                                                                                                            |   | - |   |   | (35,000 | ) |
| Prepaid                expenses and other                                 |   |                                                                  | 199,754    |                                                                                                                         |   | 14,438 |   |   | - |   |
| Accounts                payable and accrued liabilities                   |   |                                                                  | 28,882     |                                                                                                                         |   | (2,337,420 | ) |   | 56,408 |   |
| Income                taxes payable                                       |   |                                                                  | (35,000    | )                                                                                                                            |   | 35,000 |   |   | - |   |
|                                                                      |   |                                                                  |       |                                                                                                                         |   |   |   |   |   |   |
| Net                cash provided by (used in) operating activities        |   |                                                                  | (323,830   | )                                                                                                                            |   | (2,640,598 | ) |   | 35,708,045 | ) |
|                                                                      |   |                                                                  |       |                                                                                                                         |   |   |   |   |   |   |
| **Investing                activities:**                                  |   |                                                                  |       |                                                                                                                         |   |   |   |   |   |   |
| Additions                to oil, gas, and mineral properties              |   |                                                                  |       |                                                                                                                         |   |   |   |   |   |   |
| net                of assets acquired for common stock and reimbursements |   |                                                                  | (333,907   | )                                                                                                                            |   | (143,023 | ) |   | (5,934,703 | ) |
| Well                drilling costs                                        |   |                                                                  | (889,561   | )                                                                                                                            |   | - |   |   | (889,561 | ) |
| Drilling                advances from joint interest owners               |   |                                                                  | 632,432    |                                                                                                                         |   | - |   |   | - |   |
| Net                proceeds from settlement                               |   |                                                                  | -          |                                                                                                                         |   | 8,125,900 |   |   | 8,124,016 |   |
| Proceeds                from relinquishment of surface rights             |   |                                                                  | -          |                                                                                                                         |   | - |   |   | 246,733 |   |
| Purchase                of certificate of deposit                         |   |                                                                  | (50,830    | )                                                                                                                            |   | (10,000 | ) |   | (125,830 | ) |
| Purchase                of minority interest in CPC                       |   |                                                                  | -          |                                                                                                                         |   | (801,923 | ) |   | (801,823 | ) |
| Equipment                purchases                                        |   |                                                                  | (10,563    | )                                                                                                                            |   | (1,891 | ) |   | (74,103 | ) |
| Net                cash provided by (used in) investing activities        |   |                                                                  | (1,284,861 | )                                                                                                                            |   | 7,169,063 |   |   | 544,729 |   |
|                                                                      |   |                                                                  |       |                                                                                                                         |   |   |   |   |   |   |
| **Financing                activities:**                                  |   |                                                                  |       |                                                                                                                         |   |   |   |   |   |   |
| Loans                from officers                                        |   |                                                                  | -          |                                                                                                                         |   | 31,500 |   |   | 111,790 |   |
| Repayment                of loans to officers                             |   |                                                                  | -          |                                                                                                                         |   | (111,790 | ) |   | (111,790 | ) |
| Sale                of common stock net of expenses                       |   |                                                                  | -          |                                                                                                                         |   | - |   |   | 30,380,612 |   |
| Proceeds                from exercise of options                          |   |                                                                  | -          |                                                                                                                         |   | - |   |   | 884,249 |   |
| Sale                of shares by subsidiary                               |   |                                                                  | -          |                                                                                                                         |   | - |   |   | 820,000 |   |
| Sale                of subsidiary shares                                  |   |                                                                  | -          |                                                                                                                         |   | - |   |   | 3,720,000 |   |
| Net                cash provided by (used in) financing activities        |   |                                                                  | -          |                                                                                                                         |   | (80,290 | ) |   | 35,804,861 |   |
|                                                                      |   |                                                                  |       |                                                                                                                         |   |   |   |   |   |   |
| Net                increase (decrease) in cash and cash equivalents       |   |                                                                  | (1,608,691 | )                                                                                                                            |   | 4,448,175 |   |   | 641,545 |   |
| Cash                and cash equivalents at beginning of period           |   |                                                                  | 2,250,236  |                                                                                                                         |   | 179 |   |   | - |   |
| Cash                and cash equivalents at end of period                 |   | $                                                                     | 641,545    |                                                                                                                         | $      | 4,448,354 |   | $ | 641,545 |   |

----

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

**FORM      10-Q**

**PART      I - FINANCIAL INFORMATION**

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

| Gross                  settlement proceeds      |   | $      | 12,500,000 |   |
|-------------------------------------------------|--------|--------|------------|--------|
|                                            |   |   |       |   |
| Distribution                  to other parties: |   |   |       |   |
| Lykes                  Mineral Corporation      |   |   | 1,390,000  |   |
| Outside                  Royalty Holders        |   |   | 2,540,000  |   |
| Settlement                  Consultant          |   |   | 465,000    |   |
|                                            |   |   |       |   |
| Gross                  proceeds to Coastal      |   |   | 8,105,000  |   |
|                                            |   |   |       |   |
| Purchase                  of other CPC shares   |   |   | 802,000    |   |
| Paid                  to Coastal Creditors      |   |   | 2,431,000  |   |
|                                            |   |   |       |   |
| Net                  proceeds to Company        |   | $      | 4,872,000  |   |

----

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

**FORM        10-Q**

**PART        I - FINANCIAL INFORMATION**

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

----

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

**FORM      10-Q**

**PART      I - FINANCIAL INFORMATION**

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

**Montana      Leases**

----

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

**FORM        10-Q**

**PART        I - FINANCIAL INFORMATION**

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

**North      Dakota Leases**

**Florida      Leases**

----

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

**FORM        10-Q**

**PART        I - FINANCIAL INFORMATION**

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

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

**Forward      Looking Statements**

**Critical      Accounting Policies**

----

**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**
** **

**Liquidity and Capital Resources      **

**Liquidity**

----

**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**
** **

**Liquidity and Capital Resources      **

**Results of Operations**

**Nine      months ended September 30, 2006 vs. September 30, 2005**

----

**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**
** **

**Three      months ended September 30, 2006 vs. September 30, 2005**

**ITEM      3**
**Quantitative      and Qualitative Disclosure About Market Risk**

----

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

**FORM        10-Q**

**PART        I - FINANCIAL INFORMATION**

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

----

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

**FORM      10-Q**

**PART      II - OTHER INFORMATION**

**September      30, 2006**

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

----

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

**FORM      10-Q**

**PART      II - OTHER INFORMATION**

**September      30, 2006**

**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 |
|--|------|----------------------------------------------------------------------------------------|

----

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

**FORM      10-Q**

**September      30, 2006**

**SIGNATURES**

|                                |                                                                           |                             |
|-------------------------------------|--------------------------------------------------------------------------------|----------------------------------|
|                                | **COASTAL                CARIBBEAN OILS & MINERALS, LTD.**Registrant       |
|                           |                                                                      |                        |
| Date:              November 9, 2006 | By                                                                   | /s/              Phillip W. Ware |
|                                | Phillip              W. Ware                                                   |
|                                | Chief                Executive Officer, President                and Treasurer |

----