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**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





For
      the
      quarterly period ended  **June
      30,
      2006**





o
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 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.
                Employerincorporation
                or organization)
            
            Identification
                No.)





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





(850)
      653-2732


(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 (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 an accelerated filer (as defined in
      Rule
      12b-2 of the Exchange Act).  ̈ Yes T No





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
      August 9, 2006 was 46,211,604.







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




**FORM
      10-Q**




**JUNE
      30, 2006**





**Table
      of Contents**




**PART
      I - FINANCIAL INFORMATION**





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




-2-
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**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
                31,2006
            
            2005(Unaudited)
            
            (Note)**Assets**Current
                assets:Cash
                and cash equivalents
            
            $
            1,220,543
            
            $
            2,250,236Prepaid
                expenses and other
            
            
            11,649
            
            
            199,754Total
                current assets
            
            
            1,232,192
            
            
            2,449,990Certificate
                of deposit
            
            
            75,000
            
            
            75,000Well
                drilling costs
            
            
            730,020
            
            
            —Petroleum
                leases
            
            
            2,028,862
            
            
            1,860,614Equipment,
                net
            
            
            1,771
            
            
            1,771Total
                assets
            
            $
            4,067,845
            
            $
            4,387,375**Liabilities
                and Shareholders’ (Deficit) Equity**Current
                liabilities:Accounts
                payable and accrued liabilities
            
            $
            94,811
            
            $
            27,526Income
                taxes payable
            
            
            —
            
            
            35,000Total
                current liabilities
            
            
            94,811
            
            
            62,526Shareholders'
                equityCommon
                stock, par value $.12 per share:Authorized
                - 250,000,000 sharesOutstanding
                - 46,211,604, respectively
            
            
            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
            
            
            (33,710,169
            )
            
            (33,358,354
            )Total
                shareholders’ equity
            
            
            3,973,034
            
            
            4,324,849Total
                liabilities and shareholders’ equity
            
            $
            4,067,845
            
            $
            4,387,375


Note:
      The
      balance sheet at December 31, 2005 has been derived from


the
      audited consolidated financial statements at that date.




See
      accompanying notes .


-3-
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**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 30,2006
            
            2005
            
            2006
            
            2005
            
            2006**Interest
                and other income**
            
            $
            11,220
            
            $
            —
            
            $
            26,463
            
            $
            —
            
            $
            3,954,757**Gain
                on settlement**
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            8,124,01611,220
            
            
            —
            
            
            26,463
            
            
            —
            
            
            12,078,773**Expenses:**Legal
                fees and costs
            
            
            65,576
            
            
            5,024
            
            
            111,659
            
            
            14,057
            
            
            17,166,726Administrative
                expenses
            
            
            80,293
            
            
            30,358
            
            
            196,667
            
            
            78,491
            
            
            10,134,207Salaries
            
            
            33,850
            
            
            24,759
            
            
            65,100
            
            
            49,519
            
            
            3,932,931Shareholder
                communications
            
            
            1,601
            
            
            6,000
            
            
            4,852
            
            
            12,060
            
            
            4,080,761Goodwill
                impairment
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            801,823Write
                off of unproved properties
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            5,560,494Exploration
                costs
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            247,465Lawsuit
                judgments
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            1,941,916Minority
                interests
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (632,974
            )Other
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            364,865Contractual
                services
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            2,155,728181,320
            
            
            66,141
            
            
            378,278
            
            
            154,127
            
            
            45,753,942Income
                taxes
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            35,000**Net
                loss**
            
            **$**
            **(170,100**
            **)**
            **$**
            **(66,141**
            **)**
            **$**
            **(351,815**
            **)**
            **$**
            **(154,127**
            **)**Deficit
                accumulated duringthe
                development stage
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            (33,710,169
            )Weighted
                average number ofShares
                outstanding (basic &diluted)
            
            
            46,221,604
            
            
            46,221,604
            
            
            46,221,604
            
            
            46,221,604Net
                loss per share (basic & diluted)
            
            $
            (.004
            )
            $
            (.001
            )
            $
            (.008
            )
            $
            (.003
            )


See
      accompanying notes.


-4-
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**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,
            
            To2006
            
            2005
            
            June
                30, 2006**Operating
                activities:**Net
                loss
            
            $
            (351,815
            )
            $
            (154,127
            )
            $
            (33,710,169
            )Adjustments
                to reconcile net loss to net cashused
                in operating activities:Gain
                on settlement
            
            
            —
            
            
            —
            
            
            (8,124,016
            )Goodwill
                impairment
            
            
            —
            
            
            —
            
            
            801,823Minority
                interest
            
            
            —
            
            
            —
            
            
            (632,974
            )Depreciation
            
            
            —
            
            
            —
            
            
            120Write
                off of unproved properties
            
            
            —
            
            
            —
            
            
            5,619,741Common
                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
            
            
            188,105
            
            
            14,057
            
            
            (11,649
            )Accrued
                liabilities
            
            
            67,285
            
            
            108,481
            
            
            94,811Income
                taxes payable
            
            
            (35,000
            )
            
            —
            
            
            —Net
                cash provided by (used in) operating activities
            
            
            (131,425
            )
            
            (31,589
            )
            
            (35,515,640
            )**Investing
                activities:**Additions
                to oil, gas, and mineral propertiesnet
                of assets acquired for common stock and reimbursements
            
            
            (240,385
            )
            
            —
            
            
            (5,841,181
            )Well
                drilling costs
            
            
            (657,883
            )
            
            —
            
            
            (657,883
            )Net
                proceeds from settlement
            
            
            —
            
            
            —
            
            
            8,124,016Proceeds
                from relinquishment of surface rights
            
            
            —
            
            
            —
            
            
            246,733Purchase
                of certificate of deposit
            
            
            —
            
            
            —
            
            
            (75,000
            )Purchase
                of minority interest in CPC
            
            
            —
            
            
            —
            
            
            (801,823
            )Purchase
                of fixed assets
            
            
            —
            
            
            —
            
            
            (63,540
            )Net
                cash provided by (used in) investing activities
            
            
            (898,268
            )
            
            —
            
            
            931,322**Financing
                activities:**Loans
                from officers
            
            
            —
            
            
            31,500
            
            
            —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
            
            
            —
            
            
            31,500
            
            
            35,804,861Net
                (decrease) increase in cash and cash equivalents
            
            
            (1,029,693
            )
            
            (89
            )
            
            1,220,543Cash
                and cash equivalents at beginning of period
            
            
            2,250,236
            
            
            179
            
            
            —Cash
                and cash equivalents at end of period
            
            $
            1,220,543
            
            $
            90
            
            $
            1,220,543


See
      accompanying notes.


-5-
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**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’s), 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 and six month
      periods ended June 30, 2006 are not necessarily indicative of the results that
      may be expected for the year ending December 31, 2006. 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,
      2005.




Note
      2.  Going
      Concern





As
      of
      June 30, 2006, the Company had no revenues, had recurring losses from operations
      and has had an accumulated deficit during the development stage.   We,
      along with various other parties, settled several lawsuits in 2005, which were
      filed by the Company, our subsidiary Coastal Petroleum Company and others
      against the State of Florida (See Notes 3 and 5).  All of these lawsuits
      were related to the State’s actions limiting oil and gas exploration and
      development activities on land covered by our subsidiary's
      leases and by royalties held by the Company and others.  The cost
      of that litigation was substantial.  Management believes its current cash
      position will allow the Company to move forward to explore and develop
      profitable oil and gas operations, although there is no assurance these efforts
      will be successful.





Note
      3.  Litigation





Florida
      Case





In
      June
      2005, the Company and others agreed to a final settlement of all claims and
      rights with the State of Florida (the State) for $12.5 million (the Agreement).
      The State paid out the settlement through an intermediary in July 2005. The
      total settlement and the amount received by the Company was as
      follows:


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




-6-
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**COASTAL
      CARIBBEAN OILS & MINERALS, LTD.**


**FORM
        10-Q**
 
 **PART
        I - FINANCIAL INFORMATION**


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





Note
      3. Litigation (Continued)





As
      part
      of the settlement, the Company acquired the remaining minority interests in
      its
      subsidiary, Coastal Petroleum for $802,000. As Coastal Petroleum had no tangible
      or intangible assets at the time the shares were acquired, the full purchase
      price was assigned to goodwill. The Company reviewed its goodwill related to
      Coastal Petroleum for impairment and determined the goodwill was fully impaired.
      Therefore, an impairment charge of $802,000 was made during the quarter ending
      September 30, 2005. The Company now owns 100% of Coastal Petroleum Company.





For
      the
      quarter ending September 30, 2005, the Company recorded a gain on its share
      of
      the settlement of $8,124,000 after deducting all direct settlement costs and
      costs to cancel various royalty rights related to the Florida
      leases.





Lease
      Taking Case (Lease 224-A)





This
      proceeding has been dismissed as part of the Agreement with the
      State.





Royalty
      Taking Case





This
      proceeding has been dismissed as part of the Agreement with the
      State.





Lease
      Taking Case (Lease 224-B)





This
      proceeding has been dismissed as part of the Agreement with the
      State.





Note
      4. Loss
      per share





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 (the Company
      has continuing losses).





Note
      5. Oil
      & Gas Development Activity





Drilling
      Activity





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 Company has capitalized $730,000 in drilling costs through June 30,
      2006 and is currently in the process of completing and testing the well. The
      well hit the target Lodgepole reef, but the reef had been flushed with fresh
      water. The well drilled through several other formations that were prospective
      for oil or gas and all but two of them have been tested. One is currently being
      evaluated and the other remains to be tested. The drilling results will remain
      confidential until that process is complete.


-7-
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**COASTAL
        CARIBBEAN OILS & MINERALS, LTD.**
 **FORM
          10-Q**
 
 **PART
          I - FINANCIAL INFORMATION**


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





Note
      5. Oil
      & Gas Development Activity (Continued)





**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. 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. Under a prior agreement, the
      Company was required to drill a test well on an identified Lodgepole Reef
      prospect by March 31, 2006, in order to maintain the contract and have the
      option to have fifty additional Lodgepole Reef prospects identified. Under
      the
      current amended agreement, the Company must drill a test well on an identified
      Lodgepole Reef prospect by September 30, 2006, in order to maintain the contract
      and have the option under that contract to have all of the Lodgepole Reef
      prospects identified over the extent of the Valley County Leases and in
      surrounding areas.





The
      Company has received four permits to drill on its Valley County Leases. The
      Company estimates the cost to drill a test well on the Valley County Leases
      to
      be approximately $500,000 and the Company is actively seeking partners to
      participate for the bulk of expenditures.





The
      Company has also agreed to participate and act as operator in a twin well to
      the
      only known well to produce from the Lodgepole in Montana. The Company estimates
      its participation costs in the twin well to be $100,000. The well is located
      in
      Valley County and the Company will be the operator until the well is returned
      to
      production.


-8-
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          to Table of Contents**




**COASTAL
        CARIBBEAN OILS & MINERALS, LTD.**
 **FORM
          10-Q**
 
 **PART
          I - FINANCIAL INFORMATION**


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





Note
      5. Oil
      & Gas Development Activity (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. Since that time,
      some of the leases have expired and the Company currently holds leases on
      8,884.15 gross and 8,198.35 net acres in Slope County. The Company is obligated
      to drill a test well before September 30, 2006, 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.





**Florida
      Leases**





The
      Florida Leases were surrendered to Florida as a part of the 2005 Agreement
      with
      Florida and are no longer held by the Company.





Prior
      to
      2005, Coastal Petroleum held three unproved and nonproducing oil, gas and
      mineral leases granted by the Trustees of the Internal Improvement Fund of
      the
      State of Florida (Trustees). These leases covered submerged and unsubmerged
      lands, principally along the Florida Gulf Coast, and certain inland lakes and
      rivers throughout the State. The two leases bordering the Gulf Coast were
      divided into three areas, each running the entire length of the coastline from
      Apalachicola Bay to the Naples area. Coastal Petroleum held certain royalty
      interests in the inner area, no interest in the middle area and a 100% working
      interest in the outside area. Coastal Petroleum also held a 100% working
      interest in Lake Okeechobee, and a royalty interest in other areas. Coastal
      Petroleum had agreed not to conduct exploration, drilling, or mining operations
      on said lake, except with prior approval of the Trustees.





Note
      6. Income
      Taxes





For
      the
      three and six months ended June 30, 2006 and 2005, the Company reported a
      loss for both financial statement reporting and income tax purposes. The Company
      has provided a 100% valuation allowance on its additional deferred tax asset
      as
      a result of its net operating loss carryforward. The Company has approximately
      $8,800,000 in net operating loss carryforwards at December 31,
      2005.





Note
      7. 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 capitalized $40,000 paid to
      this
      entity for the six months ended June 30, 2006. No amounts were incurred for
      the
      six months ended June 30, 2005.





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


-9-
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          to Table of Contents**




**COASTAL
        CARIBBEAN OILS & MINERALS, LTD.**
 **FORM
          10-Q**
 
 **PART
          I - FINANCIAL INFORMATION**


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





Note
      7. Related
      Party Transactions (Continued)





a
      director of the Company. The Company expensed $72,000 and $0 in legal fees
      for
      the six months ended June 30, 2006 and 2005, 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 significantly improved its cash and working capital positions as
      the
      result of its settlement with the State of Florida. The Company has $1.220M
      in
      cash at June 30, 2006 compared to $90 at June 30, 2005. The Company has paid
      all
      its past due accounts and is current with all its vendors and has no loans
      outstanding.





As
      of June
      30,
      2006 ,
      the
      Company had no revenues, had recurring losses prior to 2005 and had an
      accumulated deficit during the development stage.   We, along with
      others, settled several lawsuits in June 2005, which were filed by the Company,
      our subsidiary Coastal


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**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)





**Liquidity and Capital Resources** (Continued)





Petroleum
      Company and others against the State of Florida (See Notes 3 and 5).  All
      of these lawsuits were related to the State’s actions limiting our ability to
      commence development activities through our subsidiary.  The cost of that
      litigation was substantial.  Management believes its current cash position
      will allow the Company to move forward to explore and develop profitable oil and gas operations, although there is no assurance these efforts
      will be successful.





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 8,884.15
      gross
      and 8,198.35 net acres in Slope County. 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
      expects its share of the cost to drill the three initial wells to be
      approximately $1.5 million over the next twelve months.





In
      February 2006, the Company acquired new oil and gas leases in eastern Montana
      covering 27,496 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 now holds leases in Valley County covering a total
      of
      137,163.26 net acres. The Company has also received four permits to drill on
      its
      Valley County Leases. The Company is actively seeking partners to share the
      cost
      of wells it intends to drill over the next year.








In
      January 2006, the Company drilled its first well in
      north
      central Montana under a farm-in agreement with the mineral owner on acreage
      in
      Blaine County. The Company has capitalized $730,000 in drilling costs through June
      30 ,
      2006
      and is currently in the process of completing and testing the well. The well
      hit
      the target Lodgepole reef, but the reef had been flushed with fresh water.
      The
      well drilled through several other formations that were prospective for oil
      or
      gas and all but two of those have been tested. One is currently being evaluated
      and the other remains to be tested. The drilling results will remain
      confidential until that process is complete.




The
      Company has also agreed to participate and act as operator in a twin well to
      the
      only known well to produce from the Lodgepole in Montana. The Company estimates
      its participation costs in the twin well to be $100,000. The well is located
      in
      Valley County and the Company will be the operator until the well is returned
      to
      production. The operation is expected to commence before the end of August
      2006.


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**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**





**Six
      months ended June 30, 2006 vs. June 30, 2005**





In
      June
      2005, we settled all our legal actions with the State of Florida and realized
      a
      gain of $8,124,000 in July 2005. Prior to June 2005, we expensed all our oil
      and
      gas property lease costs as impaired as well as substantial legal costs.





Prior
      to
      June 2005, we had been working toward resolution of our legal actions against
      the State of Florida, and we continued to suffer declining financial condition
      and a lack of resources to continue pursuing expensive and lengthy litigation.
      We minimized expenses, deferred payments and borrowed funds from our officers
      to
      maintain our legal efforts against the State of Florida.





Since
      June 2005, we have actively acquired oil and gas leases in North Dakota and
      Montana and we began drilling our first well in January 2006.





Our
      interest income increased in 2006 due to the short-term investment of cash
      received from the settlement. We had no such investments in 2005.





During
      2005, we attempted to minimize all other operating expenses. For 2005, we had
      one employee, and maintained legal counsel on a monthly retainer and maintained
      our minimum periodic reporting obligations. During 2006, almost all our
      operating costs increased due to our lease acquisitions and well drilling
      activity in North Dakota and Montana resulting in significant increases in
      travel and lodging costs. We also added Company directors, increased director
      compensation, added director liability insurance and hired an additional
      administrative employee. Our legal expenses increased in 2006 due to our
      entering various lease and other contracts and for drafting documents to solicit
      drilling partners.


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**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)





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





In
      June
      2005, we settled all our legal actions with the State of Florida and realized
      a
      gain of $8,124,000 in July 2005. Prior to June 2005, we expensed all our oil
      and
      gas property lease costs as impaired as well as substantial legal costs.





Prior
      to
      June 2005, we had been working toward resolution of our legal actions against
      the State of Florida, and we continued to suffer declining financial condition
      and a lack of resources to continue pursuing expensive and lengthy litigation.
      We minimized expenses, deferred payments and borrowed funds from our officers
      to
      maintain our legal efforts against the State of Florida.





Since
      June 2005, we have actively acquired oil and gas leases in North Dakota and
      Montana and we began drilling our first well in January 2006.





Our
      interest income increased in 2006 due to the short-term investment of cash
      received from the settlement. We had no such investments in 2005.





During
      2005, we attempted to minimize all other operating expenses. For 2005, we had
      one employee, and maintained legal counsel on a monthly retainer and maintained
      our minimum periodic reporting obligations. During 2006, almost all our
      operating costs increased due to our lease acquisitions and well drilling
      activity in North Dakota and Montana resulting in significant increases in
      travel and lodging costs. We also added Company directors, increased director
      compensation, added director liability insurance and hired an additional
      administrative employee. Our legal expenses increased in 2006 due to our
      entering various lease and other contracts and for drafting documents to solicit
      drilling partners.





**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, 2006.


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**COASTAL
        CARIBBEAN OILS & MINERALS, LTD.**
 **FORM
          10-Q**
 
 **PART
          I - FINANCIAL INFORMATION**


**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.


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


**FORM
      10-Q**


**PART
      II - OTHER INFORMATION**





**June
      30, 2006**






**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, 2005.


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


**FORM
      10-Q**


**PART
      II - OTHER INFORMATION**





**June
      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




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





**FORM
      10-Q**





**June
      30, 2006**




**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.**


Registrant




Date:
      August 11, 2006


By: /s/
      Phillip W. Ware


Phillip
      W. Ware


Chief
      Executive Officer, President
      and Treasurer


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