**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  **September
      30, 2007**




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





For
      the
      transition period from ________________ to _________________





Commission
      file number 1-4668





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


(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. x Yes  ̈ No





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




Large
                  accelerated filer  ̈
              Accelerated
                  filer  ̈
              Non-accelerated
                  filer x




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


 ̈ Yes
 x No




The
      number of shares outstanding of the issuer's single class of common stock as
      of
      November7, 2007 was 46,211,604.







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





**FORM
      10-Q**





**September 30,
      2007**





**Table
      of Contents**




**PART
      I - FINANCIAL INFORMATION**





PageITEM
                1
            
            Financial
                StatementsConsolidated
                balance sheets at September 30, 2007 and December 31,
                2006
            
            3Consolidated
                statements of operations for the three and nine month periods ended
                September 30, 2007 and 2006 and for the period from January 31, 1953
                (inception) to September 30, 2007
            
            4Consolidated
                statements of cash flows for the nine month periods ended
                September 30, 2007 and 2006 and for the period from January 31,
                1953 (inception) to September 30, 2007
            
            5Notes
                to consolidated financial statements
            
            6ITEM
                2
            
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            
            9ITEM
                3
            
            Quantitative
                and Qualitative Disclosure About Market Risk
            
            13ITEM
                4
            
            Controls
                and Procedures
            
            14**PART
                II - OTHER INFORMATION**ITEM
                5
            
            Other
                Information
            
            15ITEM
                6
            
            Exhibits
            
            16Signatures
            
            17




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




September
                  30,
              
              December
                  31,2007
              
              2006(Unaudited)
              
              (Note)**Assets**Current
                  assets:Cash
                  and cash equivalents
              
              $
              76,640
              
              $
              342,541Prepaid
                  expenses and other
              
              
              -
              
              
              29,255Total
                  current assets
              
              
              76,640
              
              
              371,796Certificates
                  of deposit
              
              
              129,909
              
              
              126,313Petroleum
                  leases
              
              
              2,317,774
              
              
              2,199,809Equipment,
                  net
              
              
              9,565
              
              
              11,455Total
                  assets
              
              $
              2,533,888
              
              $
              2,709,373**Liabilities
                  and Shareholders’ Equity**Current
                  liabilities:Accounts
                  payable and accrued liabilities
              
              $
              209,817
              
              $
              5,322Note
                  payable
              
              
              126,000
              
              
              -Total
                  current liabilities
              
              
              335,817
              
              
              5,322Shareholders'
                  equity:Common
                  stock, par value $.12 per share:Authorized
                  - 250,000,000 sharesOutstanding
                  - 46,211,604 shares
              
              
              5,545,392
              
              
              5,545,392Capital
                  in excess of par value
              
              
              32,137,811
              
              
              32,137,81137,683,203
              
              
              37,683,203Deficit
                  accumulated during the development stage
              
              
              (35,485,132
              )
              
              (34,979,152
              )Total
                  shareholders’ equity
              
              
              2,198,071
              
              
              2,704,051Total
                  liabilities and shareholders’ equity
              
              $
              2,533,888
              
              $
              2,709,373




Note:
      The
      balance sheet at December 31, 2006 has been derived from


the
      audited consolidated financial statements at that date.




See
      accompanying notes .




3




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





**FORM
      10-Q**





**PART
      I - FINANCIAL INFORMATION**





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





**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


(Expressed
      in U.S. dollars)





(A
      Bermuda Corporation)


A
      Development Stage Company





(Unaudited)


For
                  theperiod
                  fromJan.
                  31, 1953(inception)
                  toThree
                  months ended September 30,
              
              Nine
                  months ended September 30,
              
              September
                  30,2007
              
              2006
              
              2007
              
              2006
              
              2007**Interest
                  and other income**
              
              $
              8
              
              $
              8,913
              
              $
              4,815
              
              $
              35,376
              
              $
              3,974,459**Gain
                  on settlement**
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              8,124,0168
              
              
              8,913
              
              
              4,815
              
              
              35,376
              
              
              12,098,475**Expenses:**Legal
                  fees and costs
              
              
              36,956
              
              
              49,951
              
              
              121,432
              
              
              161,610
              
              
              17,380,668Administrative
                  expenses
              
              
              63,862
              
              
              75,739
              
              
              223,490
              
              
              272,406
              
              
              10,474,773Salaries
              
              
              31,250
              
              
              39,050
              
              
              104,150
              
              
              104,150
              
              
              4,115,181Shareholder
                  communications
              
              
              469
              
              
              11,924
              
              
              10,697
              
              
              16,776
              
              
              4,104,207Goodwill
                  impairment
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              801,823Write
                  off of unproved properties
              
              
              (34,766
              )
              
              -
              
              
              51,026
              
              
              -
              
              
              6,629,955Exploration
                  costs
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              247,465Lawsuit
                  judgments
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,941,916Minority
                  interests
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (632,974
              )Other
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              364,865Contractual
                  services
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              2,155,72897,771
              
              
              176,664
              
              
              510,795
              
              
              554,942
              
              
              47,583,607**Income
                  tax benefit**
              
              
              -
              
              
              35,000
              
              
              -
              
              
              35,000
              
              
              -**Net
                  loss**
              
              $
              (97,763
              )
              $
              (132,751
              )
              $
              (505,980
              )
              $
              (484,566
              )Deficit
                  accumulated duringthe
                  development stage
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              (35,485,132
              )Weighted
                    average number of Shares
                    outstanding (basic &diluted)
              
              
              46,221,604
              
              
              46,221,604
              
              
              46,211,604
              
              
              46,221,604Net
                  loss per share (basic & diluted)
              
              $
              (.002
              )
              $
              (.003
              )
              $
              (.011
              )
              $
              (.01
              )




See
      accompanying notes.




4




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


**FORM
      10-Q**


**PART
      I - FINANCIAL INFORMATION**




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




**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


(Expressed
      in U.S. Dollars)





(A
      Bermuda Corporation)


A
      Development Stage Company


(Unaudited)




For
                  the period from Jan. 31, 1953Nine
                  months ended
              
              (inception)
                  toSeptember
                  30,
              
              September
                30,2007
              
              2006
              
              2007**Operating
                  activities:**Net
                  loss
              
              $
              (505,980
              )
              $
              (484,566
              )
              $
              (35,485,132
              )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
              
              
              1,890
              
              
              2,100
              
              
              3,408Write
                  off of unproved properties
              
              
              51,026
              
              
              -
              
              
              6,689,202Common
                  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
              
              
              29,256
              
              
              199,754
              
              
              -Income
                  taxes receivable
              
              
              -
              
              
              (35,000
              )
              
              -Accounts
                  payable and accrued liabilities
              
              
              204,494
              
              
              28,882
              
              
              209,818Income
                  taxes payable
              
              
              -
              
              
              (35,000
              )
              
              -Net
                  cash used in operating activities
              
              
              (219,314
              )
              
              (323,830
              )
              
              (36,091,198
              )**Investing
                  activities:**Additions
                    to oil, gas, and mineral propertiesnet of assets acquired for
                    common stock and reimbursements
              
              
              (207,140
              )
              
              (333,907
              )
              
              (6,147,131
              )Well
                  drilling costs
              
              
              (51,026
              )
              
              (889,561
              )
              
              (1,069,461
              )Sale
                  of unproved nonoperating interests
              
              
              89,175
              
              
              -
              
              
              89,175Net
                  proceeds from settlement
              
              
              -
              
              
              -
              
              
              8,124,016Proceeds
                  from relinquishment of surface rights
              
              
              -
              
              
              -
              
              
              246,733Purchase
                  of certificate of deposit
              
              
              (3,596
              )
              
              (50,830
              )
              
              (129,909
              )Purchase
                  of minority interest in CPC
              
              
              -
              
              
              -
              
              
              (801,823
              )Purchase
                  of fixed assets
              
              
              -
              
              
              (10,563
              )
              
              (74,623
              )Net
                  cash provided by (used in) investing activities
              
              
              (172,587
              )
              
              (1,284,861
              )
              
              236,977**Financing
                  activities:**Loan
                  proceeds
              
              
              126,000
              
              
              -
              
              
              126,000Loans
                  from officers
              
              
              -
              
              
              -
              
              
              111,790Repayments
                  of loans from officers
              
              
              -
              
              
              -
              
              
              (111,790
              )Sale
                  of common stock net of expenses
              
              
              -
              
              
              -
              
              
              30,380,612Shares
                  issued upon exercise of options
              
              
              -
              
              
              -
              
              
              884,249Sale
                  of shares by subsidiary
              
              
              -
              
              
              -
              
              
              820,000Sale
                  of subsidiary shares
              
              
              -
              
              
              -
              
              
              3,720,000Net
                  cash provided by financing activities
              
              
              126,000
              
              
              -
              
              
              35,930,861Net
                  (decrease) increase in cash and cash equivalents
              
              
              (265,901
              )
              
              (1,608,691
              )
              
              76,640Cash
                  and cash equivalents at beginning of period
              
              
              342,541
              
              
              2,250,236
              
              
              -Cash
                  and cash equivalents at end of period
              
              $
              76,640
              
              $
              641,545
              
              $
              76,640




See
      accompanying notes.




5


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


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





Note
      1.  Basis
      of Presentation





The
      accompanying unaudited consolidated financial statements include Coastal
      Caribbean Oils & Minerals, Ltd. (“the Company”), its wholly owned
      subsidiary, Coastal Petroleum Company (“Coastal Petroleum”) and Coastal
      Petroleum’s wholly owned subsidiary, Williston Basin, Inc., and have been
      prepared in accordance with generally accepted accounting principles for interim
      financial information and with the instructions to Form 10-Q and Rule 10-01
      of
      Regulation S-X. Accordingly, they do not include all of the information and
      footnotes required by generally accepted accounting principles for complete
      financial statements. In the opinion of management, all adjustments considered
      necessary for a fair presentation have been included. All such adjustments
      are
      of a normal recurring nature. Operating results for the three and nine month
      periods ended September 30, 2007 are not necessarily indicative of the results
      that may be expected for the year ending December 31, 2007. For further
      information, refer to the consolidated financial statements and footnotes
      thereto included in the Company’s Annual Report on Form 10-K for the year ended
      December 31, 2006.




Note
      2.  Going
      Concern





As
      of
      September 30, 2007, the Company had no revenues, had recurring losses from
      operations and has had an accumulated deficit during the development
      stage.  The Company's current cash position is not adequate to fund
      existing operations or exploration and development of its oil and gas
      properties. Management currently has in place two agreements with separate
      parties covering different parts of the Company’s leases under which the parties
      will each drill a test well and then have the option to purchase a 50% working
      interest in the leases covered by their agreement. If both parties exercised
      their options, the Company would receive approximately $2,500,000, although
      there is no assurance the drilling will be successful or that the options 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





Drilling
      Activity





Subsequent
      to the end of the third quarter the Company began drilling a well on its Valley
      County, Montana Leases to test a shallow natural gas prospect. The well reached
      a total depth of 1,126 feet, casing was run into the hole and the well will
      be
      completed and tested for gas in two horizons in which there were gas shows.
      This
      well is the initial well to be drilled under an agreement with Western Standard
      Energy Corp. Also, t he
      initial well under an agreement with F-Cross Resources, LLC was spudded on
      November 3, 2007 and the Company expects that it will be completed during
      November 2007.




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’s initial well in Blaine County, Montana in January 2006 hit the target
      Lodgepole reef, but the reef had been flushed with fresh water. Several other
      formations were tested and while gas was encountered, the well did not contain
      economic quantities of oil or gas. The Company expensed $800,000 in drilling
      costs related to this well in the fourth quarter of 2006. This well was
      abandoned by the Company.





The
      Company also participated in and acted as operator in a twin well to the only
      known well to produce from the Lodgepole in Montana. The targeted Lodgepole
      reef
      contained oil, but not in sufficient quantities to be commercial for the
      Company. Likewise, an uphole test of the Mission Canyon Formation resulted
      in
      oil being encountered, but not in sufficient quantities to be commercial for
      the
      Company. The Company’s participation costs in the twin well were approximately
      $245,000, which was expensed in the fourth quarter of 2006. The total cost
      of
      the well was approximately $1,360,000. There 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. This well was abandoned.





**Montana
      Leases**





The
      Company’s primary presence in Montana is in Valley County, where it holds leases
      covering 137,163.26 net acres. The Company acquired approximately 109,423.26
      net
      acres in eastern Montana for $1,568,000 from EOG Resources, Inc. and Great
      Northern Gas Company in July 2005 and another 27,740 net acres contiguous to
      those leases the Company acquired from the Bureau of Land Management and United
      States Department of the Interior in February of 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 2007 to 2014.





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
      August
      2007, the Company entered into a farmout agreement with Western Standard Energy
      Corp. (f/k/a Lusora Healthcare Systems Inc.) (“Western”) Under the agreement
      Western paid $40,000 up front to Coastal and then paid an additional $384,000
      to
      cover the costs of drilling the first well to test a shallow natural gas
      prospect in Valley County, Montana and to cover associated lease rentals.
      Western will have a 100% working interest in the well until payout when it
      will
      be reduced to 80% with Coastal receiving the other 20% working interest. The
      first
      well under this agreement was drilled during October 2007, and reached a total
      depth of 1,126 feet, casing was run into the hole and the well will be completed
      and tested for gas in two horizons in which there were gas shows. W ithin
      30
      days after the test well is completed, Western has the option to purchase a
      50%
      interest in approximately 42,000 acres near the well location
      (referred to as “Valley County Shallow Gas Assembly”) for $1,000,000, payable in
      $200,000 installments based on certain milestones related to drilling step-out
      wells. The Company is currently in the permitting process for permits to drill
      those step-out wells.




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)




In
      September 2007, the Company received $50,000 from F-Cross Resources, LLC (“F-
      Cross”) when the two parties entered into a farmout agreement covering
      approximately 64,000 acres on the northwest part of the Company’s Valley County
      Leases. Under the agreement, F-Cross has the option to drill a Lodgepole test
      well within six months and after drilling that well has 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 well
      with F-Cross was spudded on November 3, 2007 and the Company expects that it
      will be completed during November 2007. Upon completion of the well, F-Cross
      has
      the option to acquire 50% working interest in the approximately 64,000 acres
      covered by the agreement for $25 per acre. F-Cross also may extend its option
      to
      acquire the 50% working interest by drilling a second Lodgepole test well.





The
      Company still holds approximately 30,000 acres of lease in its Valley County
      Leases that are not under agreement with a third party and the Company is not
      currently looking for other entities to team with to explore that
      acreage.





**North
      Dakota Leases**





In
      July
      2005, the Company acquired leases to the deeper rights in approximately 21,688
      net acres in and near Slope County, North Dakota for a one time fee of $50,000
      from an entity controlled by one of the Company’s Directors. Since that time,
      some of the leases have expired and the Company currently holds leases on
      9,388.94 gross and 9,150.31 net acres in Slope County. The Company is obligated
      to drill a test well on the original leases totaling 7,671.08 acres before
      December 1, 2007, and has the option to drill the remaining Lodgepole Reef
      prospects on these leases. The Company had intended to team with other entities
      to share the cost of the initial 9,700 foot test well, the total estimated
      drilling cost of which is estimated to be $1,500,000, 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. The Company
      still intends to team with other entities to explore these leases.





Note
      5.  Income
      Taxes





For
      the
      three and nine month periods ending September 30, 2007 and 2006, the
      Company reported a loss for both financial statement reporting and income tax
      purposes. The Company has provided a 100% valuation allowance on its deferred
      tax asset as a result of its net operating loss carryforwards. The Company
      has
      approximately $10,000,000 in net operating loss carryforwards at December 31,
      2006.




8


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


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





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 and capitalized $2,000
      and
      $60,000 to this entity for the nine months ended September 30, 2007, and
      2006, respectively.





The
      Company pays a monthly retainer to the law firm of Angerer & Angerer. The
      principals of the law firm include two individuals who are collectively
      shareholders, officers and a director of the Company. The Company expensed
      $108,000 and $108,000 in legal fees for the nine months ended September 30,
      2007 and 2006, respectively. The Company owes $60,000 in accrued legal fees
      to
      Angerer & Angerer as of September 30, 2007.





The
      Company has retained the law firm of Igler & Dougherty, P.A. as securities
      counsel. One of the Company’s directors is a shareholder in the law firm. The
      Company has expensed $10,716 and $43,640 in legal fees and costs for the nine
      months ended September 30, 2007 and 2006, respectively.





Note
      7.  Note
      Payable





The
      Company borrowed $126,000 in May 2007 to pay its lease obligations that were
      due
      in June 2007. The note required the loan to be repaid prior to the Company
      spudding the first well on any of the approximately 42,000 acres its leases
      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.




**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.




9


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


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





**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 $77,000 in available cash, excluding certificate of deposits pledged
      for drilling permits, at September 30, 2007, compared to $343,000 at
      December 31, 2006. Our current liabilities exceed our current assets by
      $259,000 at September 30, 2007. We have suspended payments to our
      directors, general legal counsel, and employee since the second quarter of
      2007
      and have accrued $209,817 in expenses as of September 30,
      2007.





In
      May
      2007, The Company borrowed $126,000 to pay its lease obligations that were
      due
      in September 2007. The loan is to be repaid prior to the Company spudding the
      first well on any of the approximately 42,000 acres its leases 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. This loan was repaid on October 15, 2007,
      prior to the spudding of the first well on the acreage, out of the funds
      advanced by Western Standard Energy Corp. under their agreement with the
      Company.





In
      August
      2007, the Company received $40,000 under an agreement with Western Standard
      Energy Corp. (f/k/a Lusora Healthcare Systems Inc.) (“Western”) to drill a
      shallow natural gas prospect in Valley County Montana. Western is to pay for
      the
      cost of the well and associated lease rentals estimated at $384,000. This
      well
      was drilled during October 2007, to a total depth of 1,126 feet, casing was
      run
      into the hole and the well will be completed and tested for gas in two horizons
      in which there were gas shows. Within
      30 days after the test well is completed, Western has the option to purchase
      a
      50% interest in the approximately 42,000 acres covered by the agreement, which
      are located around the test well location, for $1,000,000, payable in $200,000
      installments based on certain milestones.




In
      September 2007, the Company received $50,000 from F-Cross Resources, LLC
      (“F-Cross”) for the option to drill a Lodgepole test well within six months and
      with an option to acquire an interest in surrounding acreage. F-Cross has 100%
      working interest in the well until payout and an 80% working interest subsequent
      to payout. The first well with F-Cross was spudded on November 3, 2007 and
      the
      Company expects that it will be completed during November 2007. Upon completion
      of the well, F-Cross has the option to acquire 50% working interest in
      approximately 64,000 acres of the Company's westernmost leases for $25 per
      acre.




10


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


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





As
      of September 30,
      2007 ,
      the
      Company had no revenues, had recurring losses prior to 2005
      and
      had an accumulated deficit during the development stage. The Company's current
      cash position is not adequate to fund existing operations or exploration and
      development of its oil and gas properties. Management
      currently has in place two agreements with two parties covering different parts
      of the Company’s leases under which the parties will each drill a test well and
      have the option to purchase a 50% working interest in the leases covered by
      their agreement. If both parties exercised their options, the Company would
      receive approximately $2,500,000, although there is no assurance drilling will
      be successful or the options will be exercised. These
      situations raise substantial doubt about the Company's ability to continue
      as a
      going concern.





**Capital
      Resources**





The
      Company currently holds leases in Valley County, Montana covering a total of
      137,163.26 net acres and has agreements in place with two parties, covering
      two
      separate areas within the leases. The agreement with Western covers
      approximately 42,000 acres in the central part of the Valley County leases.
      Western has paid for the drilling of the first gas test well on these leases
      and
      has the option to drill four step-out wells with the Company and to acquire
      a
      50% interest in the leases for $1,000,000.





During
      October 2007, the Company drilled the initial well under the agreement with
      Western to test the Company’s 34,000 acre shallow natural gas prospect. The
      well
      confirmed that the structure it was drilled to test is high as expected at
      the
      well’s location .
      The
      well is high in the direction of all of the nearest wells: 36 feet high to
      the
      nearest well to the southwest (3.5 miles); 78 feet high to the nearest well
      to
      the west northwest (5 miles); 81 feet high to the nearest well to the southeast
      (6 miles); 94 feet high to the nearest well to the east northeast (5 miles);
      159
      feet high to the nearest well to the south (5 miles); and 245 feet high to
      the
      nearest well to the north east (6 miles). The height of the structure compared
      to surrounding areas allows it to trap migrating gas.





The
      well
      reached a total depth of 1,126 feet, casing was run into the hole and the well
      will be completed and tested for gas in two horizons in which there were gas
      shows. The gas shows were in the Judith River sand and the Eagle sand. The
      Company is also in the permitting process to obtain the permits to drill four
      step-out wells with Western to further test the shallow gas
      prospect.





The
      Company’s agreement with F-Cross covers approximately 64,000 acres in the
      westernmost part of the Valley County leases. The Company has received two
      permits to drill the first two Lodgepole wells with F-Cross under the agreement
      between the parties. The initial well under this agreement was spudded by
      F-Cross on November 3, 2007 and the Company expects that it will be completed
      during November 2007.





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




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)




The
      Company’s initial well in Blaine County, Montana in January 2006 hit the target
      Lodgepole reef, but the reef had been flushed with fresh water. Several other
      formations were tested and while gas was encountered, the well did not contain
      economic quantities of oil or gas. The Company expensed $800,000 in drilling
      costs related to this well in the fourth quarter of 2006. This well was
      abandoned by the Company.





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





**Results of Operations**





**Nine
      months ended September 30, 2007 vs. September 30, 2006**





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





Our
      activities for 2006 consisted primarily of identifying drilling prospects and
      drilling two wells. We ceased substantial drilling activities in January 2007,
      and for the remainder of 2007 we have sought other entities to team with to
      drill on our leases. Therefore, our travel, lodging and other drilling related
      expenses decreased from 2006 levels. We incurred $51,000 to prepare our wells
      for abandonment. We also terminated one of our two employees in early 2007
      to
      reduce expenses. In 2006, we incurred legal fees related to seeking and
      negotiating with drilling team members, which activities decreased in
      2007.





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





**Three
      months ended September 30, 2007 vs. September 30,
      2006**





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





Our
      activities for 2006 consisted primarily of identifying drilling prospects and
      drilling two wells. We ceased substantial drilling activities in January 2007,
      and for the remainder of 2007 we have sought other entities to team with to
      drill on our leases. Therefore, our travel, lodging and other drilling related
      expenses decreased from 2006 levels. We sold certain piping and other well
      supplies for $17,000, which reduced the cost of preparing our wells for
      abandonment. We also terminated one of our two employees in early 2007 to reduce
      expenses. In 2006, we incurred legal fees related to seeking and negotiating
      with drilling team members, which activities decreased in 2007.




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)




Our
      interest income decreased in 2007 from 2006 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 September 30, 2007.




13


**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.




14




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


**FORM
      10-Q**


**PART
      II - OTHER INFORMATION**





**September
      30, 2007**





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




Coastal
      Caribbean is currently a passive foreign investment company, or PFIC, for United
      States federal income tax purposes, which could result in negative tax
      consequences to a shareholder. If, for any taxable year, the Company’s passive
      income or assets that produce passive income exceed levels provided by U.S.
      law,
      the Company would be a "passive foreign investment company," or PFIC, for U.S.
      federal income tax purposes. For the years 1987 through 2001, Coastal
      Caribbean's passive income and assets that produce passive income exceeded
      those
      levels and for those years Coastal Caribbean constituted a PFIC. If Coastal
      Caribbean is a PFIC for any taxable year, then the Company’s U.S. shareholders
      potentially would be subject to adverse U.S. tax consequences of holding and
      disposing of shares of our common stock for that year and for future tax years.
      Any gain from the sale of, and certain distributions with respect to, shares
      of
      the Company’s common stock, would cause a U.S. holder to become liable for U.S.
      federal income tax under section 1291 of the Internal Revenue Code (the interest
      charge regime). The tax is computed by allocating the amount of the gain on
      the
      sale or the amount of the distribution, as the case may be, to each day in
      the
      U.S. shareholder’s holding period. To the extent that the amount is allocated to
      a year, other than the year of the disposition or distribution, in which the
      corporation was treated as a PFIC with respect to the U.S. holder, the income
      will be taxed as ordinary income at the highest rate in effect for that year,
      plus an interest charge.





For
      further information, refer to the consolidated financial statements and
      footnotes thereto included in the Company’s Annual Report on Form 10-K for the
      year ended December 31, 2006.




15




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


**FORM
      10-Q**


**PART
      II - OTHER INFORMATION**





**September
      30, 2007**





**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




16




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


**FORM
      10-Q**


**September
      30, 2007**




**SIGNATURES**




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




**COASTAL
                CARIBBEAN OILS & MINERALS, LTD.**
              RegistrantDate:
              November 7, 2007
            By
            /s/
              Phillip W. WarePhillip
              W. WareChief
              Executive Officer,President and Treasurer




17