**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-Q**





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




For
      the
      quarterly period ended  **June
      30,
      2008**




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





For
      the
      transition period from ________________ to _________________





Commission
      file number 1-4668





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




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





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




(850)
                653-2732(Registrant's
                telephone number, including area
                code)





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





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




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




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





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





The
      number of shares outstanding of the issuer's single class of common stock as
      of
      August 7, 2008 was 46,261,604.





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





**FORM
      10-Q**





**June 30,
      2008**





**Table
      of Contents**




Page**PART
                I - FINANCIAL INFORMATION**ITEM
                1
            Financial
                StatementsConsolidated
                balance sheets at June 30, 2008 and December 31,
                2007
            3Consolidated
                statements of operations for the three and six month periods ended
                June 30, 2008 and 2007 and for the period from January 31, 1953
                (inception) to June 30, 2008
            4Consolidated
                statements of cash flows for the six month periods ended June 30,
                2008 and 2007 and for the period from January 31, 1953 (inception)
                to
                June 30, 2008
            5Notes
                to consolidated financial statements
            6ITEM
                2
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            11ITEM
                3
            Quantitative
                and Qualitative Disclosure About Market Risk
            15ITEM
                4
            Controls
                and Procedures
            16**PART
                II - OTHER INFORMATION**ITEM
                5
            Other
                Information
            17ITEM
                6
            Exhibits
            18Signatures
            19




2


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





**FORM
      10-Q**





**PART
      I - FINANCIAL INFORMATION**





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





**CONSOLIDATED
      BALANCE SHEETS**


(Expressed
      in U.S. dollars)





(A
      Bermuda Corporation)


A
      Development Stage Company





June 30,
            
            December
                31,2008
            
            2007(Unaudited)
            
            (Note)**Assets**Current
                assets:Cash
                and cash equivalents
            
            $
            673
            
            $
            30,264Prepaid
                expenses and other
            
            
            10,013
            
            
            30,040Total
                current assets
            
            
            10,686
            
            
            60,304Certificates
                of deposit, restricted
            
            
            137,737
            
            
            135,364Petroleum
                leases
            
            
            2,163,576
            
            
            2,168,293Equipment,
                net
            
            
            7,675
            
            
            8,935Total
                assets
            
            $
            2,319,674
            
            $
            2,372,896**Liabilities
                and Shareholders’ Equity**Current
                liabilities:Accounts
                payable and accrued liabilities
            
            $
            42,415
            
            $
            11,125Amounts
                due to related parties
            
            
            559,365
            
            
            348,208Total
                current liabilities
            
            
            601,780
            
            
            359,333Shareholders'
                equityCommon
                stock, par value $.12 per share:Authorized
                - 250,000,000 sharesOutstanding
                - 46,261,604 and 46,211,604 shares, respectively
            
            
            5,551,392
            
            
            5,545,392Capital
                in excess of par value
            
            
            32,139,311
            
            
            32,137,81137,690,703
            
            
            37,683,203Deficit
                accumulated during the development stage
            
            
            (35,972,809
            )
            
            (35,669,640
            )Total
                shareholders’ equity
            
            
            1,717,894
            
            
            2,013,563Total
                liabilities and shareholders’ equity
            
            $
            2,319,674
            
            $
            2,372,896




Note:
      The
      balance sheet at December 31, 2007 has been derived from


the
      audited consolidated financial statements at that date.




See
      accompanying notes .


3


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





**FORM
      10-Q**





**PART
      I - FINANCIAL INFORMATION**





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





**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


(Expressed
      in U.S. dollars)





(A
      Bermuda Corporation)


A
      Development Stage Company





(Unaudited)




For
                  thePeriod
                  fromJan. 31, 1953Three months ended June 30,
              
              Six months ended June 30,
              
              (inception)to
                  June 30,2008
              
              2007
              
              2008
              
              2007
              
              2008**Interest
                  and other income**
              
              $
              1,133
              
              $
              3,613
              
              $
              2,373
              
              $
              4,807
              
              $
              3,982,287**Gain
                  on settlement**
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              8,124,0161,133
              
              
              3,613
              
              
              2,373
              
              
              4,807
              
              
              12,106,303**Expenses:**Legal
                  fees and costs
              
              
              36,953
              
              
              31,785
              
              
              77,366
              
              
              84,476
              
              
              17,496,261Administrative
                  expenses
              
              
              70,323
              
              
              92,715
              
              
              158,516
              
              
              159,628
              
              
              10,740,737Salaries
              
              
              31,250
              
              
              33,850
              
              
              62,500
              
              
              72,900
              
              
              4,208,931Shareholder
                  communications
              
              
              799
              
              
              648
              
              
              7,160
              
              
              10,228
              
              
              4,122,855Goodwill
                  impairment
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              801,823Write
                  off of unproved properties
              
              
              -
              
              
              85,792
              
              
              -
              
              
              85,792
              
              
              6,631,505Exploration
                  costs
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              247,465Lawsuit
                  judgments
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,941,916Minority
                  interests
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (632,974
              )Other
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              364,865Contractual
                  services
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              2,155,728139,325
              
              
              244,790
              
              
              305,542
              
              
              413,024
              
              
              48,079,112**Income
                  tax benefit**
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -**Net
                  loss**
              
              $
              (138,192
              )
              $
              (241,177
              )
              $
              (303,169
              )
              $
              (408,217
              )Deficit
                  accumulated during the development stage
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              (35,972,809
              )Weighted
                  average number of Shares outstanding (basic & diluted)
              
              
              46,261,604
              
              
              46,211,604
              
              
              46,237,978
              
              
              46,211,604Net
                  loss per share (basic & diluted)
              
              $
              (.003
              )
              $
              (.005
              )
              $
              (.007
              )
              $
              (.009
              )





See
      accompanying notes.


4


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


**FORM
      10-Q**


**PART
      I - FINANCIAL INFORMATION**





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





**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


(Expressed
      in U.S. Dollars)





(A
      Bermuda Corporation)


A
      Development Stage Company


(Unaudited)




For the period from
                Jan. 31, 1953Six
                  months ended
              
              (inception)June 30,
              
              To2008
              
              2007
              
              June 30,
                  2008**Operating
                  activities:**Net
                  loss
              
              $
              (303,169
              )
              $
              (408,217
              )
              $
              (35,972,809
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Gain
                  on settlement
              
              
              -
              
              
              -
              
              
              (8,124,016
              )Goodwill
                  impairment
              
              
              -
              
              
              -
              
              
              801,823Minority
                  interest
              
              
              -
              
              
              -
              
              
              (632,974
              )Depreciation
              
              
              1,260
              
              
              1,260
              
              
              5,298Write
                  off of unproved properties
              
              
              -
              
              
              85,792
              
              
              6,690,752Common
                  stock issued for services
              
              
              -
              
              
              -
              
              
              119,500Compensation
                  recognized for stock option grant
              
              
              -
              
              
              -
              
              
              75,000Recoveries
                  from previously written off properties
              
              
              -
              
              
              -
              
              
              252,173Net
                  change in:Prepaid
                  expenses
              
              
              20,027
              
              
              19,503
              
              
              (10,014
              )Accounts
                  payable and accrued liabilities
              
              
              242,447
              
              
              167,382
              
              
              601,782Net
                  cash used in operating activities
              
              
              (39,435
              )
              
              (134,280
              )
              
              (36,193,485
              )**Investing
                  activities:**Additions
                  to oil, gas, and mineral properties net of assets acquired for
                  common
                  stock and reimbursements
              
              
              (213,103
              )
              
              (195,260
              )
              
              (6,416,192
              )Well
                  drilling costs
              
              
              -
              
              
              (85,792
              )
              
              (1,071,011
              )Sale
                  of unproved nonoperating interests
              
              
              217,820
              
              
              -
              
              
              512,434Net
                  proceeds from settlement
              
              
              -
              
              
              -
              
              
              8,124,016Proceeds
                  from relinquishment of surface rights
              
              
              -
              
              
              -
              
              
              246,733Purchase
                  of certificate of deposit
              
              
              (2,373
              )
              
              (3,596
              )
              
              (137,737
              )Purchase
                  of minority interest in CPC
              
              
              -
              
              
              -
              
              
              (801,823
              )Purchase
                  of fixed assets
              
              
              -
              
              
              -
              
              
              (74,623
              )Net
                  cash provided by (used in) investing activities
              
              
              2,344
              
              
              (284,648
              )
              
              381,797**Financing
                  activities:**Loan
                  proceeds
              
              
              -
              
              
              126,000
              
              
              -Loans
                  from officers
              
              
              -
              
              
              -
              
              
              111,790Repayment
                  of loans from officers
              
              
              -
              
              
              -
              
              
              (111,790
              )Sale
                  of common stock net of expenses
              
              
              -
              
              
              -
              
              
              30,380,612Shares
                  issued upon exercise of options
              
              
              7,500
              
              
              -
              
              
              891,749Sale
                  of shares by subsidiary
              
              
              -
              
              
              -
              
              
              820,000Sale
                  of subsidiary shares
              
              
              -
              
              
              -
              
              
              3,720,000Net
                  cash provided by financing activities
              
              
              7,500
              
              
              126,000
              
              
              35,812,361Net
                  decrease in cash and cash equivalents
              
              
              (29,591
              )
              
              (292,928
              )
              
              673Cash
                  and cash equivalents at beginning of period
              
              
              30,264
              
              
              342,541
              
              
              -Cash
                  and cash equivalents at end of period
              
              $
              673
              
              $
              49,613
              
              $
              673




See
      accompanying notes.


5


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





**FORM
      10-Q**





**PART
      I - FINANCIAL INFORMATION**





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





Note
      1.  Basis
      of Presentation





The
      accompanying unaudited consolidated financial statements include Coastal
      Caribbean Oils & Minerals, Ltd. (“the Company”) and its wholly owned
      subsidiary, Coastal Petroleum Company (“Coastal Petroleum”) and have been
      prepared in accordance with generally accepted accounting principles for interim
      financial information and with the instructions to Form 10-Q and Rule 10-01
      of
      Regulation S-X. Accordingly, they do not include all of the information and
      footnotes required by generally accepted accounting principles for complete
      financial statements. In the opinion of management, all adjustments considered
      necessary for a fair presentation have been included. All such adjustments
      are
      of a normal recurring nature. Operating results for the three and six month
      periods ended June 30, 2008 are not necessarily indicative of the results
      that may be expected for the year ending December 31, 2008. 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, 2007.




Note
      2.  Going
      Concern





As
      of
      June 30, 2008, the Company had no revenues, had recurring losses from
      operations and has had an accumulated deficit during the development
      stage.  The Company's current cash position is not adequate to fund
      existing operations or exploration and development of its oil and gas
      properties. Management currently has in place an agreement with a party covering
      part of the Company’s leases under which the party will drill a test well and
      have the option to purchase a 50% working interest in the leases covered by
      the
      agreement. If the party exercises the option, the Company would receive
      approximately $1,000,000, although there is no assurance drilling will be
      successful or the option will be exercised. The Company also has an agreement
      with another party, under which the party has the option to purchase a 50%
      working interest in the Company’s remaining Valley County leases by paying
      $1,000,000 in drilling costs on the Company’s behalf, although there is no
      assurance drilling will be successful or the option will be exercised. These
      situations raise substantial doubt about the Company's ability to continue
      as a
      going concern. These consolidated financial statements do not include any
      adjustments to reflect the possible future effects on the recoverability and
      classification of assets or amounts and classification of liabilities, which
      may
      result from the outcome of this uncertainty.





Note
      3. Net
      income (loss) per share





Net
      income (loss) per share is based upon the weighted average number of common
      and
      common equivalent shares outstanding during the period. The Company’s basic and
      diluted calculations of EPS are the same because the exercise of options is
      not
      assumed in calculating diluted EPS, as the result would be
      anti-dilutive.





Note
      4. Oil
      & Gas Development Activity





***Montana
      Leases***





The
      Company’s primary presence in Montana is in Valley County, where it holds leases
      covering approximately 124,882 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 Valley County Leases are subject
      to various overriding royalty interests to others ranging up to 19.5%. These
      leases expire in years from 2011 to 2016.




6


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





**FORM
      10-Q**





**PART
      I - FINANCIAL INFORMATION**




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





Note
      4.  Oil
      & Gas Development Activity (Continued)




The
      Company has an agreement with a consultant entity, controlled by one of the
      Company’s Directors, to identify Mississippian Lodgepole Reef prospects to be
      drilled on and near its Valley County Leases. Previously under the agreement,
      the Company was required to drill a test well on an identified Lodgepole Reef
      prospect by a certain deadline, however, there is no longer a drilling
      obligation under the agreement.





In
      May
      2008, the Company entered an agreement with Cobra Oil and Gas. Under the
      agreement, Cobra has paid Coastal $180,000 for the option to acquire a half
      interest in approximately 87,000 acres of Coastal’s Valley County Leases. The
      agreement allowed the Company to pay its Lease rentals that were due June
      1 st and
      brings in a new party to explore on the Leases. Cobra will have two years to
      exercise the option by spending $1,000,000 on behalf of the Company, drilling
      wells on the leases under the agreement. Those leases include approximately
      62,000 acres of leases that were formally under an agreement with F-Cross
      Resources that expired earlier this year and more than 20,000 acres of other
      leases Coastal held in Valley County.





In
      August
      2007, the Company entered into a farm-out agreement with Western Standard Energy
      Corp. (“Western Standard”) Under the agreement Western Standard paid $40,000 up
      front to Coastal and then paid an additional $255,000 to cover the costs of
      drilling the first well to test a shallow natural gas prospect in Valley County,
      Montana and $129,000 to cover associated lease rentals. Western Standard will
      have a 100% working interest in the well until payout when it will be reduced
      to
      80% with Coastal receiving the remaining 20% working interest.





The
      first
      well under this agreement was drilled during October 2007, to test a shallow
      natural gas prospect near the middle of the Company’s Valley County Leases. The
      well reached a total depth of 1,126 feet, and confirmed the structural high
      that
      was targeted. The well also had gas shows in two zones. Casing was run into
      the
      hole and operations to complete and test the well were scheduled to begin at
      the
      end of November, but were delayed by equipment repairs. The well is located
      on
      Federal land and the Bureau of Land Management will not allow the completion
      and
      testing operations or any further drilling to begin until July 2008, so
      operations were suspended until that time. The Company also received an
      additional $29,000 from Western Standard to cover additional drilling and other
      costs associated with the delay in well completion, which has been recorded
      as a
      reduction in capitalized petroleum lease costs. Subsequent to the end of the
      quarter, Western Standard paid the estimated well completion costs of $65,000
      and the operations to complete and test the well are scheduled for the first
      half of August 2008.


7


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





**FORM
      10-Q**





**PART
      I - FINANCIAL INFORMATION**




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





Note
      4. Oil
      & Gas Development Activity (Continued)




Once
      operations resume and within 30 days after the test well is completed, Western
      Standard has the option to purchase a 50% interest in approximately 42,000
      (37,000 after some leases have expired) acres near the well location (referred
      to as “Valley County Shallow Gas Assembly”). The cost to exercise the option
      would be $1,000,000, payable in $200,000 installments based on certain
      milestones related to drilling step-out wells. The Company currently has permits
      to drill two of the step-out wells and is in the permitting process for permits
      to drill two additional step-out wells.





F-Cross
      Resources, LLC (“F-Cross”) will continue to hold its interest in the section in
      which it drilled a well under the September 2007 agreement which has otherwise
      expired. Under that agreement the Company received $50,000 from F-Cross
      Resources, LLC (“F- Cross”) when the two parties entered into a farm-out
      agreement covering approximately 64,000 acres (now 62,000 after some leases
      expired) on the northwest part of the Company’s Valley County Leases. Under the
      agreement, F-Cross had the option to drill a Lodgepole test well within six
      months and after drilling that well had the further option to acquire an
      interest in surrounding acreage. F-Cross is to pay for the cost of drilling
      the
      initial well and will receive a 100% working interest in the well until payout
      and an 80% working interest subsequent to payout. The first Lodgepole test
      well
      under the agreement was spudded on November 3, 2007 and drilling has finished,
      but the well is awaiting completion and testing of several zones which have
      potential for both oil and gas. Unlike the shallow gas well on Federal land,
      this well is located on State land and provided that there is no State
      objection, the Company expects F-Cross will resume operations to complete and
      test the well once the weather and regulators permit it.  F-Cross did not
      meet the requirements in the agreement and in late March the option to acquire
      an interest in additional acreage expired, leaving F-Cross with rights only
      in
      the section in which it drilled the well.





***North
      Dakota Leases***





In
      July
      2005, the Company acquired leases to the deeper rights in approximately 21,688
      net acres in and near Slope County, North Dakota for a one time fee of $50,000
      from an entity controlled by one of the Company’s Directors and the Company has
      invested some additional funds to geochemically test and high-grade these and
      other prospects on the leases. Since that time, some of the leases have expired
      and the Company currently holds leases on approximately 8,510 net acres in
      North
      Dakota. The Company is obligated to drill a test well on the original leases
      totaling 7,031 acres before August 31, 2008, and has the option to drill the
      remaining Lodgepole Reef prospects on these leases. That deadline has been
      extended in the past and may be extended again. The Company intends to team
      with
      other entities to share the cost of the initial 9,700 foot test well, the total
      estimated drilling cost of which is estimated to be $1,500,000, however, it
      is
      unlikely that the Company will be able to identify and contract with a team
      prospect prior to the expiration date. The leases making up the remaining
      acreage were leased by the Company and have no obligation associated with them.




8


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





**FORM
      10-Q**





**PART
      I - FINANCIAL INFORMATION**




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





Note
      4.  Oil
      & Gas Development Activity (Continued)





In
      an
      effort to explore the North Dakota leases, in December of 2007 the Company
      entered a new farm-out agreement with Western Standard. Under the agreement,
      the
      Company assigned leases over four of its high-graded Lodgepole Reef prospects to
      Western Standard in return for $80,000. The Company received $40,000 in November
      2007, $25,000 in February 2008 and $15,000 in April 2008, which was recorded
      as
      a reduction in capitalized petroleum lease costs. The Company will also retain
      a
      back-in working interest of 20% in the leases after payout. Oil For America
      has
      agreed to waive the drilling obligation on these four prospects. The Company
      still retains additional Lodgepole reef prospects on its North Dakota leases
      that are not covered by this farm-out agreement.





Note
      5.  Income
      Taxes





For
      the
      three and six month periods ending June 30, 2008 and 2007, the Company
      reported a loss for both financial statement reporting and income tax purposes.
      The Company has provided a 100% valuation allowance on its deferred tax asset
      as
      a result of its net operating loss carryforwards. The Company has approximately
      $10,000,000 in net operating loss carryforwards at December 31,
      2007.





Note
      6.    Related
      Party Transactions





Pursuant
      to a written agreement with respect to the Valley County Leases, the Company
      uses an entity controlled by an individual who is a shareholder, officer and
      director of the Company to perform geotechnical analysis of potential drilling
      sites at a cost of $1,000 per site. The Company paid no amounts to this entity
      for the three and six month periods ended June 30, 2008, and 2007, respectively.





The
      Company pays a monthly retainer to the law firm of Angerer & Angerer which
      has been litigation counsel to the Company for more than twenty-five years
      and
      continues to serve the Company in that capacity as well as others including
      general counsel services, management services, public relations, shareholder
      relations and representing the Company before state and federal agencies for
      permitting. The principals of the law firm include two individuals who are
      collectively shareholders, officers and a director of the Company. The Company
      expensed $72,000 and $72,000 in legal fees for the six month periods ended
      June 30, 2008 and 2007, respectively, including $36,000 and $36,000 in
      legal fees for the three month periods ended June 30, 2008 and 2007,
      respectively. The Company owes $168,000 in accrued legal fees to Angerer &
Angerer as of June 30, 2008.





The
      Company has retained the law firm of Igler & Dougherty, P.A. as securities
      counsel. One of the Company’s directors is a shareholder in the law firm. The
      Company expensed $9,679 and $9,760 in legal fees and costs for the six month
      periods ended June 30, 2008 and 2007, respectively, including $5,705 and $5,722
      in legal fees for the three month periods ended June 30, 2008 and 2007,
      respectively.




9


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





**FORM
      10-Q**





**PART
      I - FINANCIAL INFORMATION**





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





Note
      7.    Note
      Payable





The
      Company borrowed $126,000 in May 2007 to pay lease obligations that were due
      in
      June 2007. The note required the loan to be repaid prior to the spudding of
      the
      first well on any of the approximately 42,000 (37,000 after some leases have
      expired) acres of the Company’s leases that are covered by the loan agreement.
      Coastal assigned a 5% overriding royalty interest (before all expenses) in
      8/8ths of the oil or natural gas produced from those Valley County Montana
      leases to the lender. The loan was repaid on October 15, 2007, prior to the
      spudding of the first well on the acreage, out of the money advanced by Western
      Standard Energy Corp. to drill the first well under their agreement with the
      Company.





Note
      8.    Stock
      Transactions





In
      March
      2008, the Company received $7,500 from the exercise of outstanding stock options
      for 50,000 shares from Robert J. Angerer, Sr., a vice president and a director
      of the Company.


10


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





**FORM
      10-Q**





**PART
      I - FINANCIAL INFORMATION**




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





**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. Using this assessment, Management has determined that the
      Company’s leases are not impaired.





**Liquidity and Capital Resources**


**Liquidity**




The
      Company has no available cash, excluding certificate of deposits pledged for
      drilling permits, at June 30 ,
      2008,
      compared to $30,000 at December 31, 2007. Our current liabilities exceed
      our current assets by $582,000 at June 30, 2008. We have suspended payments
      to our directors, general legal counsel, and employee since the second quarter
      of 2007 and have accrued $560,000 in expenses as of June 30, 2008. We
      received $195,000 during the three months ended June 30, 2008 from the sale
      of
      unproved lease rights which we used primarily to pay our annual lease payments
      and other operating expenses.




11


**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)
 
 During
        the first half of 2008, we received $180,000 and $40,000 respectively under
        farm-out agreements for lease and drilling rights on our Montana and North
        Dakota leases. During 2007, we received approximately $309,000 under various
        agreements for lease and drilling rights and the options to acquire additional
        rights. Also during 2007, we received $255,000 that was used to drill one
        of the
        wells on our leases.


During
      the first half of 2008, we paid lease rentals of $183,000. We have additional
      lease payments of approximately $8,000 due in September 2008 and approximately
      $22,000 in November 2008. We may need to sell additional lease rights to obtain
      the cash to make these payments, although there is no guarantee we will be
      able
      to sell additional lease rights. Western Standard has committed to pay for
      estimated gas well completion costs of $65,000 so that funds will be in place
      once operations are allowed to begin.





We
      received $7,500 in March 2008 from the exercise of outstanding stock options
      from Robert J. Angerer, Sr., our vice president and a director of the
      Company.





As
      of
      June 30, 2008, we had no revenues, had recurring losses prior to 2005 and
      since 2005, and had an accumulated deficit during the development stage. Our
      current cash position is not adequate to fund existing operations or exploration
      and development of its oil and gas properties. We
      currently have in place an agreement with a party covering part of our leases
      under which the party will drill a test well and have the option to purchase
      a
      50% working interest in the leases covered by the agreement. If the party
      exercised the option, we would receive approximately $1,000,000, although there
      is no assurance drilling will be successful or the option will be exercised.
      The
      Company also has an agreement with another party, under which the party has
      the
      option to purchase a 50% working interest in the Company’s remaining Valley
      County leases by paying $1,000,000 in drilling costs on the Company’s behalf,
      although there is no assurance drilling will be successful or the option will
      be
      exercised. These
      situations raise substantial doubt about our ability to continue as a going
      concern.





**Capital
      Resources**





In
      Montana, we have obtained the rights to explore for oil and gas in one area
      which will be our primary area of focus. This primary area is a large assembly
      of leases covering approximately 124,882 net acres in Valley County, located
      in
      northeastern Montana close to known production from a Lodgepole reef. This
      area
      of Montana has a number of other producing formations in addition to the
      Lodgepole, including the Eagle sands. Currently we have two agreements with
      two
      different entities covering separate areas of the leases and exploration has
      begun on those leases. During 2006, we drilled two wells on lands outside these
      leases and they did not find economic quantities of oil or gas and were
      abandoned. We also hold leases in southwestern North Dakota and have an
      agreement covering four Lodgepole prospects on those leases.





The
      first
      of the two agreements we entered into was a farm-out agreement with Western
      Standard Energy Corp. (“Western Standard”) in August 2007. Under the agreement,
      Western


12


**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)
 
 Standard
        paid us $40,000 at execution and then paid an additional $384,000. From the
        $384,000, $255,000 was paid to cover the costs of drilling the first well
        to
        test a shallow natural gas prospect in Valley County, Montana and $129,000
        was
        paid to cover associated lease rentals. Western Standard will have a 100%
        working interest in the first well until payout when it will be reduced to
        80%
        and we will receive the other 20% working interest. Upon receiving the funds
        to
        cover lease rentals, we repaid in full our loan of $126,000. Under the loan
        agreement, the individual that loaned us the money continues to hold a 5%
        overriding royalty on the same approximately 42,000 (37,000 after some leases
        have expired) acres that are covered in the Western Standard farm-out agreement.


The
      first
      well under this agreement was drilled during October 2007, to test a shallow
      natural gas prospect near the middle of our Valley County Leases. The well
      reached a total depth of 1,126 feet, and confirmed the structural high that
      we
      believed to be there. The well also had gas shows in two zones. Casing was
      run
      into the hole and operations to complete and test the well were scheduled to
      begin at the end of November, but were delayed by equipment repairs. The well
      is
      located on Federal land and the Bureau of Land Management would not allow the
      completion and testing operations or any further drilling to begin between
      December 1st and July 1st, so operations were suspended until July. In December,
      we entered a Memorandum of Understanding with Western Standard which led to
      a
      farm-out agreement on our North Dakota Leases discussed below, but also allowed
      us to use $29,000 of the funds from Western Standard originally sent to cover
      completion to now cover lease rental and other costs associated with the delay
      in well completion. Subsequent to the end of the quarter, Western Standard
      sent
      $65,000 to pay the estimated well completion costs and operations to complete
      and test the well are scheduled for the first half of August 2008.





Once
      operations resume, and within 30 days after the test well is completed, Western
      Standard has the option to purchase a 50% interest in approximately 42,000
      (37,000 after some leases have expired) acres near the well location (referred
      to as “Valley County Shallow Gas Assembly”). The cost to exercise the option
      would be $1,000,000, payable in $200,000 installments based on certain
      milestones related to drilling step-out wells. We have received permits to
      drill
      two step-out wells and are currently in the permitting process for two more.





We
      entered the second agreement with Cobra Oil and Gas, in May of 2008. Under
      the
      agreement, Cobra has paid Coastal $180,000 for the option to acquire a half
      interest in approximately 87,000 acres of Coastal’s Valley County Leases. The
      agreement allowed us to pay our Lease rentals that were due June 1 st and
      brings in a new party to explore on the Leases. Cobra will have two years to
      exercise the option by spending $1,000,000 on our behalf, drilling wells on
      the
      leases under the agreement. Those leases include approximately 62,000 acres
      of
      leases that were formally under an agreement with F-Cross Resources that expired
      earlier this year and more than 20,000 acres of other leases Coastal held in
      Valley County.





F-Cross
      Resources, LLC (“F-Cross”) will continue to hold its interest in the section in
      which it drilled a well under the September 2007 agreement which has otherwise
      expired.


13


**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)
 
 Under
        that agreement we received $50,000 from F-Cross when the two parties executed
        a
        farm-out agreement covering approximately 64,000 acres (now 62,000 after
        some
        leases expired) on the northwest part of our Valley County Leases. Under
        the
        agreement, F-Cross had the option to drill a Lodgepole test well within six
        months and after drilling that well had the further option to acquire an
        interest in surrounding acreage. F-Cross is to pay for the cost of drilling
        the
        initial well and will receive a 100% working interest in the well until payout
        and an 80% working interest subsequent to payout. F-Cross exercised its option
        and the first Lodgepole test well was spudded on November 3, 2007. Drilling
        has
        finished, but the well is awaiting completion and testing of several zones
        which
        have potential for both oil and gas. Unlike the shallow gas well on Federal
        land, this well is located on State land and provided that there is no State
        objection, we expect that F-Cross will resume operations to complete and
        test
        the well once the weather and state regulators permit it.  F-Cross did not
        meet the requirements in the agreement and in late March the option to acquire
        an interest in additional acreage expired, leaving F-Cross with the interest
        in
        the section in which it drilled the well.


The
      two
      wells we were involved with drilling during 2006 and that were abandoned during
      2007 were drilled in Montana, but in areas outside of and as far as 130 miles
      from our Valley County Leases and were farm-in wells on leases held by others.
      Both of those wells reached the targeted Lodgepole reefs, but no gas or oil
      was
      present in economic quantities. We will not pursue any further drilling in
      these
      areas. The second of these wells was drilled with partners and t here
      are
      approximately $115,000 in unpaid expenses related to this well that are
      collectively the responsibility of the various partners. This amount is not
      reflected as a liability in the accompanying financial statements.





In
      North
      Dakota, we control the working interest on approximately 8,510 net acres in
      Slope, Billings, and Stark Counties, on which a number of drillable prospects
      have been mapped to date. The depth of wells here is greater than in Montana
      (approximately 9,500 feet versus approximately 5,000 feet), and so the cost
      of
      drilling is higher. A typical North Dakota wildcat well costs about $1.5 million
      to drill. We intend to bring in others to share the risk and investment in
      wells
      we drill in North Dakota until we are in a stronger financial
      position.





Through
      our efforts to bring in others to explore our North Dakota leases, in December
      of 2007 we entered a new farm-out agreement with Western Standard. Under the
      agreement, we assigned leases over four of our high-graded Lodgepole Reef
      prospects to Western Standard in return for $80,000. We received $40,000 in
      November 2007, $25,000 in February 2008 and $15,000 in April 2008. We will
      also
      retain a back-in working interest of 20% in the leases after payout. The leases
      cover all rights below the Tyler formation, including the Lodgepole formation,
      with an 80% net revenue interest. We acquired these and other leases in the
      area
      in 2005 from Oil For America for $50,000 and we have invested some additional
      funds to geochemically test and high-grade these and other prospects on the
      leases. Oil For America has agreed to waive the drilling obligation on these
      four prospects. We will still retain additional Lodgepole reef prospects on
      our
      North Dakota leases that are not covered by this farm-out agreement.


14


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





**FORM
      10-Q**





**PART
      I - FINANCIAL INFORMATION**


**ITEM 2**
              **Management's
                  Discussion and Analysis of Financial Condition
                  and********Results
                  of Operations******(Continued)
 
 As
        briefly described above, in the Memorandum of Understanding which gave rise
        to
        the new farm-out agreement, Western Standard also agreed that we could use
        the
        more than $29,000 originally forwarded to be used for completion of the first
        shallow gas well to cover the costs associated with the delay in operations,
        including annual rentals. This amount combined with the $80,000 paid for
        the
        four reef prospects helped cover our operations during the first half of
        2008.


**Results of Operations**





**Six
      months ended June 30, 2008 vs. June 30, 2007**





We
      did
      not conduct drilling activities in the first half of 2008 or 2007, due to
      weather and/or landowner access restrictions on our leases from January
      1 st to July
      1 st .
      We
      expect to resume drilling operations during the 3rd  quarter
      of 2008. Substantially all the drilling activity on our leases for 2007 was
      financed under farm-out agreements with other entities, and we expect that
      to
      continue in 2008. Therefore, our expenses are primarily administrative and
      our
      2008 expenses remained consistent with 2007 amounts.





Our
      interest income decreased in 2008 from 2007 due to lower cash
      balances.





**Three
      months ended June 30, 2008 vs. June 30, 2007**





We
      did
      not conduct drilling activities in the second quarter of 2008 or 2007, due
      to
      weather and/or landowner access restrictions on our leases from January
      1 st to July
      1 st .
      We
      expect to resume drilling operations during the 3rd  quarter
      of 2008. Substantially all the drilling activity on our leases for 2007 was
      financed under farm-out agreements with other entities, and we expect that
      to
      continue in 2008. Therefore, our expenses are primarily administrative and
      our
      2008 expenses remained consistent with 2007 amounts.





Our
      interest income decreased in 2008 from 2007 due to lower cash
      balances.





**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, 2008.




15


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





**FORM
      10-Q**





**PART
      I - FINANCIAL INFORMATION**




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




**a.**
            **Evaluation
                of disclosure controls and procedures.**





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





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





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





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




16




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


**FORM
      10-Q**


**PART
      II - OTHER INFORMATION**





**June 30,
      2008**





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




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





The
      Company believes that it would not be classified as a PFIC for the year 2007,
      because it derived the majority of its gross income in 2007 from the sale of
      interests in parts of its leases to other companies through farm-out agreements,
      and received a relatively small amount of interest the Company. However, the
      Company may have
      been considered a PFIC in previous years, which could result in negative tax
      consequences to a shareholder. The determination of whether the Company will
      be
      considered a PFIC for United States federal income tax purposes is an annual
      determination that cannot be made until the close of the fiscal year. Also,
      how
      the Company was classified last year does not affect how it will be classified
      this year.





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





For
      further information, refer to the consolidated financial statements and
      footnotes thereto included in the Company’s Annual Report on Form 10-K for the
      year ended December 31, 2007.


17


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


**FORM
      10-Q**


**PART
      II - OTHER INFORMATION**





**June 30,
      2008**





**ITEM
                6**
            
            **Exhibits**31.1
            
            Certification
                pursuant to Rule 13a-14 by Phillip W. Ware32.1
            
            Certification
                pursuant to Section 906 by Phillip W.
                Ware




18


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


**FORM
      10-Q**


**June 30,
      2008**





**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.





**COASTAL
                CARIBBEAN OILS & MINERALS, LTD.**RegistrantDate:
                August 7, 2008
            By
            /s/
                Phillip W.
                WarePhillip
                W. WareChief
                Executive Officer,President
                and Treasurer





19