UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





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




For the
quarterly period ended March 31,
2010


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


For the
transition period from ________________ to _________________





Commission
file number 1-4668





COASTAL
CARIBBEAN OILS & MINERALS, LTD.


(Exact
name of registrant as specified in its charter)




BERMUDA
            NONE(State
      or other jurisdiction of 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)
556-5924


(Registrant’s
telephone number, including area code)








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 has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). TYes ̈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
May 14, 2010 was 62,336,604.









COASTAL
CARIBBEAN OILS & MINERALS, LTD.





FORM
10-Q





March 31,
2010





Table
of Contents





PART
I - FINANCIAL INFORMATION





ITEM
      1
            Financial
      Statements
            
            PageConsolidated
      balance sheets at March 31, 2010 and December 31, 2009
            
            
            3Consolidated
      statements of operations for the three month periods ended March 31,
      2010 and 2009 and for the period from January 31, 1953 (inception) to
      March 31, 2010
            
            
            4Consolidated
      statements of cash flows for the three month periods ended March 31, 2010
      and 2009 and for the period from January 31, 1953 (inception) to
      March 31, 2010
            
            
            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
            
            
            15PART
      II - OTHER INFORMATIONITEM
      1
            Legal
      Proceedings
            
            
            16ITEM
      5
            Other
      Information
            
            
            16ITEM
      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




March
      31,
              
              
              December
      31,2010
              
              
              2009Assets
              
              (Unaudited)
              
              
              (Note)Current
      assets:Cash
      and cash equivalents
              
              $
              15,361
              
              
              $
              9,207Total
      current assets
              
              
              15,361
              
              
              
              9,207Certificates
      of deposit - Restricted
              
              
              85,920
              
              
              
              85,255Petroleum
      leases
              
              
              2,276,426
              
              
              
              2,257,741Equipment,
      net
              
              
              3,265
              
              
              
              3,895Total
      assets
              
              $
              2,380,972
              
              
              $
              2,356,098Liabilities
      and Shareholders’ EquityCurrent
      liabilities:Accounts
      payable and accrued liabilities
              
              $
              157,268
              
              
              $
              242,693Notes
      payable
              
              
              25,000
              
              
              
              73,198Amounts
      due to related parties
              
              
              835,948
              
              
              
              1,098,949Total
      current liabilities
              
              
              1,018,216
              
              
              
              1,414,840Shareholders’
      equityCommon
      stock, par value $.12 per share:Authorized
      - 250,000,000 sharesOutstanding
      – 62,336,604 and47,936,604
      shares, respectively
              
              
              7,480,392
              
              
              
              5,752,392Discount
      on common stock
              
              
              (1,313,625
              )
              
              
              (103,475
              )Capital
      in excess of par value
              
              
              32,139,311
              
              
              
              32,139,311Stock
      subscription
              
              
              -
              
              
              
              10,00038,306,078
              
              
              
              37,798,228Deficit
      accumulated during the development stage
              
              
              (36,943,322
              )
              
              
              (36,856,970
              )Total
      shareholders’ equity
              
              
              1,362,756
              
              
              
              941,258Total
      liabilities and shareholders’ equity
              
              $
              2,380,972
              
              
              $
              2,356,098




Note: The
balance sheet at December 31, 2009 has been derived from


the
audited consolidated financial statements at that date.





See accompanying
notes.




3




COASTAL
CARIBBEAN OILS & MINERALS, LTD.





FORM
10-Q





PART
I - FINANCIAL INFORMATION





ITEM 1 - Financial
Statements





CONSOLIDATED
STATEMENTS OF OPERATIONS


(Expressed
in U.S. dollars)





(A
Bermuda Corporation)


A
Development Stage Company





(Unaudited)




Three
      months ended
              
              
              For
      theperiod
      fromJan.
      31, 1953
                (inception)to
      March 31,March
      31,
              
              
              20102010
              
              
              2009Interest
      and other income
              
              $
              664
              
              
              $
              28
              
              
              $
              3,985,125Gain
      on settlement
              
              
              -
              
              
              
              -
              
              
              
              8,124,016664
              
              
              
              28
              
              
              
              12,109,141Expenses:Legal
      fees and costs
              
              
              -
              
              
              
              38,573
              
              
              
              17,654,557Administrative
      expenses
              
              
              52,578
              
              
              
              69,855
              
              
              
              11,111,945Salaries
              
              
              33,109
              
              
              
              31,250
              
              
              
              4,429,540Shareholder
      communications
              
              
              1,329
              
              
              
              1,326
              
              
              
              4,150,945Goodwill
      impairment
              
              
              -
              
              
              
              -
              
              
              
              801,823Write
      off of unproved properties
              
              
              -
              
              
              
              -
              
              
              
              6,690,752Exploration
      costs
              
              
              -
              
              
              
              -
              
              
              
              188,218Lawsuit
      judgments
              
              
              -
              
              
              
              -
              
              
              
              1,941,916Minority
      interests
              
              
              -
              
              
              
              -
              
              
              
              (632,974
              )Other
              
              
              -
              
              
              
              -
              
              
              
              364,865Contractual
      services
              
              
              -
              
              
              
              -
              
              
              
              2,350,87687,016
              
              
              
              141,004
              
              
              
              49,052,463Net
      loss
              
              $
              (86,352
              )
              
              $
              (140,976
              )Deficit
      accumulated duringthe development stage
              
              
              
              
              
              
              
              
              
              $
              (36,943,322
              )Average
      number of sharesoutstanding (basic &
      diluted)
              
              
              62,336,604
              
              
              
              46,261,604Net
      loss per share (basic & diluted)
              
              $
              (.00
              )
              
              $
              (.00
              )




See
accompanying notes.




4




COASTAL
CARIBBEAN OILS & MINERALS, LTD.




FORM
10-Q




PART
I - FINANCIAL INFORMATION





ITEM 1 - Financial
Statements





CONSOLIDATED
STATEMENTS OF CASH FLOWS


(Expressed
in U.S. Dollars)





(A
Bermuda Corporation)


A
Development Stage Company


(Unaudited)




Three
      months ended
                March
      31,
              
              
              For
      the period from Jan. 31, 1953
                (inception)
      To2010
              
              
              2009
              
              
              March
      31, 2010Operating
      activities:Net
      loss
              
              $
              (86,352
              )
              
              $
              (140,976
              )
              
              $
              (36,943,322
              )Adjustments
      to reconcile net loss to net cash provided by  (used in)
      operating activities:Gain
      on settlement
              
              
              -
              
              
              
              -
              
              
              
              (8,124,016
              )Goodwill
      impairment
              
              
              -
              
              
              
              -
              
              
              
              801,823Minority
      interest
              
              
              -
              
              
              
              -
              
              
              
              (602,949
              )Depreciation
              
              
              630
              
              
              
              630
              
              
              
              9,708Write
      off of unproved properties
              
              
              -
              
              
              
              -
              
              
              
              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
      and other
              
              
              -
              
              
              
              -
              
              
              
              -Accounts
      payable and accrued liabilities
              
              
              (130,576
              )
              
              
              140,475
              
              
              
              1,153,801Net
      cash provided by (used in) operating activities
              
              
              (216,298
              )
              
              
              129
              
              
              
              (36,567,530
              )Investing
      activities:Additions
      to oil, gas, and mineral properties net of assets acquired for
      common stock and reimbursements
              
              
              (18,685
              )
              
              
              -
              
              
              
              (6,471,937
              )Well
      drilling costs
              
              
              -
              
              
              
              -
              
              
              
              (1,071,011
              )Sale
      of unproved nonoperating interests
              
              
              -
              
              
              
              -
              
              
              
              512,595Net
      proceeds from settlement
              
              
              -
              
              
              
              -
              
              
              
              8,124,016Proceeds
      from relinquishment of surface rights
              
              
              -
              
              
              
              -
              
              
              
              246,733Purchase
      of certificate of deposit
              
              
              (665
              )
              
              
              (27
              )
              
              
              (140,575
              )Redemption
      of CDs
              
              
              -
              
              
              
              -
              
              
              
              54,655Purchase
      of minority interest in CPC
              
              
              -
              
              
              
              -
              
              
              
              (801,823
              )Purchase
      of fixed assets
              
              
              -
              
              
              
              -
              
              
              
              (74,623
              )Net
      cash provided by (used in) investing activities
              
              
              (19,350
              )
              
              
              (27
              )
              
              
              378,030Financing
      activities:Notes
      payable proceeds
              
              
              -
              
              
              
              -
              
              
              
              184,988Repayment
      of loans
              
              
              (48,198
              )
              
              
              -
              
              
              
              (159,988
              )Sale
      of common stock net of expenses
              
              
              290,000
              
              
              
              -
              
              
              
              30,748,112Shares
      issued upon exercise of options
              
              
              -
              
              
              
              -
              
              
              
              891,749Sale
      of shares by subsidiary
              
              
              -
              
              
              
              -
              
              
              
              820,000Sale
      of subsidiary shares
              
              
              -
              
              
              
              -
              
              
              
              3,720,000Net
      cash provided by financing activities
              
              
              241,802
              
              
              
              -
              
              
              
              36,204,861Net
      increase (decrease) in cash and cash equivalents
              
              
              6,154
              
              
              
              102
              
              
              
              15,361Cash
      and cash equivalents at beginning of period
              
              
              9,207
              
              
              
              752
              
              
              
              -Cash
      and cash equivalents at end of period
              
              $
              15,361
              
              
              $
              854
              
              
              $
              15,361








5


COASTAL
CARIBBEAN OILS & MINERALS, LTD.


FORM
10-Q


PART
I - FINANCIAL INFORMATION





March
31, 2010




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 month period ended
March 31, 2010, are not necessarily indicative of the results that may be
expected for the year ending December 31, 2010. 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,
2009.





Note
2. Going
Concern





As of
March 31, 2010, 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. Currently, management
is actively pursuing funding to allow the Company to undertake exploration
efforts on its own. The Company has an agreement in place with a director which
provides the director with options to further fund the Company to continue
operations and exploration of its leases. The Company continues to be in contact
with several parties interested in investing in the Company so that the Company
could explore its leases on its own. In addition, the Company has been in
contact with other parties interested in working with the Company, in buying
some of the Company’s leases or in buying an interest in those leases. There is
no assurance that the Company will be able to obtain any funding, that the
director will exercise the options under the current agreement, that sufficient
funding can be obtained, or that the Company will be able to raise necessary
funds through the sale of some of its leases or interests in those
leases.





These
situations raise substantial doubt about the Company’s ability to continue as a
going concern. The 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 earnings per share (“EPS”) are the same because the
exercise of options is not assumed in calculating diluted EPS, as the result
would be anti-dilutive.





6


COASTAL
CARIBBEAN OILS & MINERALS, LTD.
 FORM
10-Q
 PART
I - FINANCIAL INFORMATION
 
 March
31, 2010


ITEM
1 Financial
Statements(Continued)





Note
4.  Unproved
Oil, Gas and Mineral Properties





Farm-out Agreements and
Drilling Activity





In May
2008, we entered an agreement with Cobra. Under the agreement, Cobra 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 on June 1, 2008, and brought in a
new party to explore on the Leases. Cobra has until May 2010 to exercise the
option by spending $1,000,000 on behalf of the Company, drilling wells on the
leases covered by the agreement. Those leases included approximately 62,000
acres of leases that were formally under an agreement with F-Cross Resources
that expired in 2008 and more than 17,000 acres of other leases Coastal held in
Valley County. No drilling has taken place yet under this
agreement.





Montana
Leases





The
Company’s primary presence in Montana is in Valley County, where it holds leases
covering approximately 35,873 which are the remaining unexpired leases from
those leases the Company acquired in three separate acquisitions between July
2005 and February 2006. The leases acquired in those acquisitions are contiguous
to each other and are referred to collectively as “the Valley County
Leases.”





The first
acquisition of the Valley County Leases was in July 2005, when the Company
acquired the rights to drill two 6,500 foot wells to test Mississippian
Lodgepole reefs in Valley County, in northeast Montana for a one time fee of
$50,000 from an entity controlled by one of the Company’s Directors. That
acquisition included a small amount of acreage and the option to drill fifty
additional prospects in the Valley County area.





The
second acquisition of the Valley County Leases was in November 2005, when the
Company acquired a group of oil and gas lease rights to approximately 109,423
net acres in eastern Montana for $1,568,000 from EOG Resources, Inc. and Great
Northern Gas Company. These leases are subject to various overriding royalty
interests to others ranging up to 19.5%. These leases expire in years from 2011
to 2014.





The final
acquisition of acreage within the Valley County Leases was in February 2006,
when the Company acquired additional oil and gas leases in eastern Montana
covering 27,740 net acres contiguous to its existing Montana leases. These
leases were acquired from the Bureau of Land Management and United States
Department of the Interior.





The
Company borrowed $126,000 in May 2007 to pay its lease obligations that were due
in June 2007 on approximately 42,000 acres. 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 to cover lease rentals
under their agreement with the Company.




7


COASTAL
CARIBBEAN OILS & MINERALS, LTD.
 FORM
10-Q
 PART
I - FINANCIAL INFORMATION
 
 March
31, 2010


ITEM
1 Financial
Statements(Continued)





Note
4. Unproved Oil,
Gas and Mineral Properties (Continued)





North Dakota
Leases





In July
2005, the Company acquired leases to the deeper rights in approximately 21,688
net acres in and near Slope County, North Dakota for a one time fee of $50,000
from an entity controlled by one of the Company’s Directors 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 8,748 gross and 8,510
net acres in North Dakota. The Company is obligated to drill a test well on the
original leases totaling 7,031.08 acres before June 1, 2010, 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
$1,750,000, however, it is unlikely that the Company will be able to identify
and contract with a team prospect prior to the expiration date. If the option
under the current agreement with one of the Company’s directors is exercised,
the Company intends to drill one Lodgepole reef prospect on its own. The leases
making up the remaining acreage were leased by the Company and have no
obligation associated with them. The Company is actively seeking funding
sufficient to allow it to explore its leases on its own.





In an
effort to explore the North Dakota leases, in December of 2008, 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, which was recorded as a reduction in
capitalized petroleum lease costs. The Company has also retained 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 months period ending March 31, 2010 and 2009, 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 had approximately $10,000,000 in
net operating loss carryforwards at December 31, 2009.





Note
6. Related Party
Transactions





Pursuant
to a written agreement with respect to the Valley County Leases, the Company
uses an entity controlled by an individual who is a shareholder, officer and
director of the Company to perform geotechnical analysis of potential drilling
sites at a cost of $1,000 per site. The Company paid no amounts to this entity
for the three months ended March 31, 2010, and 2009, respectively.




8


COASTAL
CARIBBEAN OILS & MINERALS, LTD.
 FORM
10-Q
 PART
I - FINANCIAL INFORMATION
 
 March
31, 2010


ITEM
1 Financial
Statements(Continued)





Note
6. Related Party
Transactions (Continued)





Through
May 2009, the Company paid a monthly retainer to the law firm of Angerer &
Angerer which had been litigation counsel to the Company for more than
twenty-five years and also served 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 included two individuals
who are collectively shareholders, officers and a director of the Company. The
Company accrued and expensed $0 and $36,000 in legal fees to Angerer &
Angerer for the three months ended March 31, 2010, and 2009, respectively. The
Company owes $150,000 in accrued fees to Angerer & Angerer at March 31,
2010.





Since
June 2009, the Company retained Robert J. Angerer, Sr. as legal counsel. Mr.
Angerer has been litigation counsel to the Company for more than twenty-five
years and resigned as counsel on January 14, 2010. As counsel for the Company
he served the Company as litigation counsel, but also provided the Company
with general counsel services and management services and represented the
Company before state and federal agencies for permitting. Mr. Angerer, Sr. is
also a shareholder, officer and a director of the Company. The Company accrued
and expensed no legal fees to Mr. Angerer, Sr. for both of the three months
ended March 31, 2010, and 2009.





Also
since June 2009, the Company has retained Robert J. Angerer, Jr. who serves as
the Company’s corporate secretary and handles management services, public
relations, shareholder relations and management of the Company’s website. The
Company incurred and expensed $0 and $0 in fees to Mr. Angerer, Jr. the three
months ended March 31, 2010, and 2009, respectively.





The
Company expensed $2,495 and $4,198 for legal fees by the law firm of Igler &
Dougherty, PA, during the three months ended March 31, 2010, and 2009,
respectively.





The
Company owed Igler & Dougherty, PA $2,383 at March 31, 2010. Mr. Herbert D.
Haughton, a shareholder of the firm, was elected a director of Coastal Caribbean
and of Coastal Petroleum in December 2005.





Note
7. Certificates
of Deposit – Restricted





The
Company has pledged certificates of deposit for pollution bond requirements
under three previous well permits.





Note
8. Notes
Payable





During
the first six months of 2009, the Company borrowed $48,198 from two individuals,
which was used to make annual rental payments on specific leases. The loans are
non interest bearing and has no set repayment terms. The individuals were
granted a 0.5% royalty interest in the leases for which the borrowed money was
used to pay rentals, which are located primarily in the Starbuck prospect area
in Montana. These loans were repaid in January 2010.




9


COASTAL
CARIBBEAN OILS & MINERALS, LTD.
 FORM
10-Q
 PART
I - FINANCIAL INFORMATION
 
 March
31, 2010


ITEM
1 Financial
Statements(Continued)





Note
8. Notes
Payable (Continued)





During
August 2009, the Company borrowed $25,000 from a consultant and also agreed to
pay the consultant a fee of $25,000 to identify investors to consummate an
agreement and fund the Drilling Plan. The funds from the loan were used to pay
the Company’s annual corporate fee to Bermuda as well as certain other
operational expenses. The loan is non interest bearing and has no set repayment
terms. No investor agreements have been consummated by the consultant at
December 31, 2009, therefore the $25,000 loan is not currently due and the
$25,000 fee has not been earned.





Note
9. Stock
Transactions





On
January 14, 2010, the Company and Coastal entered into a letter agreement with
Robert J. Angerer, Sr. for the funding of immediate cash needs and granting Mr.
Angerer an option to fund the Company’s and Coastal’s future obligations. Under
the agreement Mr. Angerer provided compensation to the Company including
$300,000 cash and the forgiveness of $150,000 of legal fees owed to his law
firm, Angerer & Angerer, forgiveness of $21,500 in director fees owed to him
and credit of $240,000 for the completion of the Company’s purchase of leases on
which there is a Red River oil and gas development prospect. In return, Mr.
Angerer was issued 14,400,000 Rule 144 restricted shares of the Company’s common
stock and provided an option to further fund the Company. Mr. Angerer may
exercise up to four options by paying $3 million for each option beginning three
months after the date of the agreement and thereafter in three month intervals.
In return for the funding, Mr. Angerer would earn up to a total of 36% of the
Company’s operations in North Dakota and Montana in increments per exercised
option and a 20% interest in Coastal Petroleum. There is also one extension
available to extend the time to exercise the first option for three months in
exchange for the payment of $50,000. Simultaneous with this transaction, Mr.
Angerer resigned as the Vice President of both the Company and Coastal, but will
remain as a Director and the Chairman of the Board of Directors for both the
Company and Coastal.





Note
10. Subsequent
Events





On April
29, 2010, Mr. Angerer paid $50,000 and elected to extend the option to fund the
Company’s operations on the following terms: to pay $3 Million to be used for
drilling one of Coastal Petroleum’s Lodgepole Reef Prospects in Slope County and
for operations of the Company. In return for the payment of $3 Million, Mr.
Angerer would receive 20% of the outstanding common shares of Coastal Petroleum
and 36% of the net revenue from the well drilled. If he exercises the first
option payment Mr. Angerer then has the option to pay three additional
succeeding $3 Million payments to the Company for drilling two additional
Lodgepole Reef Prospects, wells on the Starbuck East Shallow Gas Prospect in
Montana and other company operations. Mr. Angerer would earn 36% of the net
revenues from all operations in North Dakota and Montana if he makes the three
additional payments.





10


COASTAL
CARIBBEAN OILS & MINERALS, LTD.
 FORM
10-Q
 PART
I - FINANCIAL INFORMATION
 
 March
31, 2010


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 funding 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.





General





We are an
active independent oil and gas exploration company and through our subsidiary,
Coastal Petroleum, we hold mineral rights in Montana and North Dakota in the oil
producing region known as the Williston Basin. Our objective formations on those
leases include the Lodgepole and the Eagle among others. The Company’s future
growth will be driven primarily by exploration and development activities. Our
business strategy is to increase shareholder value by acquiring and drilling
reasonably priced prospects that have good potential, whether in the Williston
Basin or in other parts of the United States, with the goal of shaping the
Company into a producing independent oil and gas firm. We will continue to seek
high quality exploration projects with potential for providing long-term
drilling inventories that generate high returns.





11
 
 COASTAL
CARIBBEAN OILS & MINERALS, LTD.
 FORM
10-Q
 PART
I - FINANCIAL INFORMATION
 
 March
31, 2010


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





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 35,873 net acres in Valley County, located in
northeastern Montana close to known production from a Lodgepole reef. At the end
of 2008, the Company held 114,832 net acres in Valley County, but in March 2009,
approximately 27,417 acres expired and in June 2009, approximately 51,542 acres
expired. Those expired leases were not covering our Starbuck East
prospect.





This area
of Montana has a number of other producing formations in addition to the
Lodgepole, including the Eagle sands. Currently we have one agreement with a
party covering some of the areas of the leases. We also hold leases in
southwestern North Dakota and have an agreement covering four Lodgepole
prospects on those leases.





We are
actively engaged in pursuing funding for our Drilling Program. The Drilling
Program is an aggressive $9,500,000 exploration operation which would allow us
to explore the potential of each of the areas we hold under lease. The Drilling
Program covers exploration in three areas: a development Red River Formation
prospect in Slope County, North Dakota, on approximately 400 acres we acquired;
the drilling of three Lodgepole Formation prospects we have on our North Dakota
Leases; and twelve step-out wells from the Federal 1-19 well on the Starbuck
East prospect in Montana. The Company is proceeding with the relatively
inexpensive process of permitting wells in its main block of leases in Valley
County, Montana, in order to accommodate the drilling of the expected
wells.





During
2009, we were primarily focused on and engaged in raising capital to fund the
Company so that we could recommence the exploration of our leases. Due to the
recession and the fragile state of the country’s financial market, capital was a
scarce commodity to obtain. While we contacted, met with and negotiated with
various individuals and groups during the year, none were able to provide the
capital necessary. While we were close to consummating an agreement with one
entity and amended the articles of our subsidiary to be prepared to complete the
transaction, the other party could not deliver the capital as promised. The
combination of the broken deal and the state of the economy left the Company
with no other viable alternative other than to sell shares of its common stock
to raise capital necessary to remain a viable public company and to retain its
most valuable leases. We sold a total of 1,191,333 shares of common stock and
raised $67,500, while continuing to search for the capital needed to fund our
Drilling Plan.





On
January 14, 2010, Robert J. Angerer, Sr., the chairman of the board of directors
and vice president of the Company at the time, entered into a letter agreement
for the funding of immediate cash needs and granting Mr. Angerer an option to
fund the Company’s and Coastal’s future obligations. The agreement was similar
to the deal that was not consummated by a third party during 2009. Under
the agreement Mr. Angerer provided compensation to the Company including
$300,000 cash and the forgiveness of $150,000 of legal fees owed to his law
firm, Angerer & Angerer, forgiveness of $21,500 in director fees owed to him
and credit of $240,000 to him for the completion of the Company’s purchase of
leases on which there is a Red River oil and gas development prospect. In
return, Mr. Angerer was issued 14,400,000 Rule 144 restricted shares of the
Company’s common stock and provided an option to further fund the Company under
specific terms.




12


COASTAL
CARIBBEAN OILS & MINERALS, LTD.
 FORM
10-Q
 PART
I - FINANCIAL INFORMATION
 
 March
31, 2010


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




Mr.
Angerer may exercise up to four options by paying $3 million for each option
beginning three months after the date of the agreement and thereafter in three
month intervals. In return for the funding, Mr. Angerer would earn up to a total
of 36% of the Company’s operations in North Dakota and Montana in increments per
exercised option and a 20% interest in Coastal Petroleum. There is also one
extension available to extend the time to exercise the first option for three
months in exchange for the payment of $50,000, which was exercised April 29,
2010.





Simultaneous
with this transaction, Mr. Angerer resigned as the Vice President of both the
Company and Coastal, but will remain as a Director and the Chairman of the Board
of Directors for both the Company and Coastal. We continue to search for capital
while Mr. Angerer’s option remains unexercised, in order to secure capital to
fund our Drilling Program. The Drilling Program is separate from the agreements
described below.





Liquidity and Capital Resources




Liquidity





The Company has no available cash,
excluding certificate of deposits pledged for drilling permits, at March 31,
2010, and December 31, 2009. Our current liabilities exceed our current
assets by $1,003,000 at March 31, 2010. We have suspended payments to our
directors, general legal counsel, and employee since the second quarter of 2007
and have accrued $836,000 in expenses as of March 31, 2010. We expect to
continue to suspend payments to these parties until sufficient funding can be
secured to resume exploration operations and cover normal operating expenses.
During the three months ended March 31, 2010, we received $290,000 in cash from
Mr. Angerer and forgiveness of $171,500 of amounts owed to him or credits for
amounts remaining to be paid to acquire leases, in exchange for the issuance of
common stock and an option to further fund the Company. In April 2010, we
received $50,000 from the exercise of this contract extension from Mr. Angerer.
We have lease payments of approximately $27,398 due in June 2010. We may need to
sell additional lease rights, obtain additional loans or secure funding to
obtain the cash to make these payments, although there is no guarantee we will
be able to sell additional lease rights or obtain loans or funding.




We are actively engaged in pursuing
funding for our Drilling Program. The Program is an aggressive $9,500,000
exploration operation which would allow us to explore the potential of each of
the areas we hold under lease. The Drilling Program covers exploration in four
areas: a development Red River Formation prospect in Slope County, North Dakota,
on approximately 400 acres we acquired; the drilling of three Lodgepole
Formation prospects we have on our North Dakota Leases; and the drilling of
twelve step-out wells from the Federal 1-19 well on the Starbuck East prospect
in Montana. The Company is proceeding with the relatively inexpensive process of
permitting wells in its main block of leases in Valley County, Montana, in order
to accommodate the drilling of the expected wells. The Drilling Program is
currently being reviewed by prospective funding parties.




13


COASTAL
CARIBBEAN OILS & MINERALS, LTD.
 FORM
10-Q
 PART
I - FINANCIAL INFORMATION
 
 March
31, 2010


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





As of March 31, 2010, 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. These situations raise substantial doubt about our
ability to continue as a going concern.




Capital
Resources





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 in North Dakota is greater than in Montana (approximately 9,500
feet versus approximately 5,000 feet), and thus the cost of drilling is higher.
A typical North Dakota wildcat well costs about $1.75 million to drill. We had
originally intended to bring in others to share the risk and investment in wells
it drills in North Dakota until the Company is in a stronger financial position,
but are now actively seeking funding to allow us to begin such exploration on
our own.





If our funding efforts are successful,
we plan to drill or participate in as many as sixteen exploratory wells under
our Drilling Plan. However, the number of wells that we drill in 2010 and their
cost will be subject to various factors, including whether or not we can obtain
sufficient funding to carry out the Drilling Program, whether Cobra will
exercise its option and begin exploration under its agreements, the availability
of drilling rigs that we can hire and whether we drill alone or with other
participants. In addition, we could reduce the number of wells that we drill if
oil and natural gas prices were to decline significantly. We expect the cost of
drilling the sixteen wells to depend upon many factors, including those above,
which may affect the cost of operations and whether and to what extent others
participate with the Company.





We expect to continue to participate
with others or to obtain sufficient funding to allow us to drill additional
wells both in Montana and North Dakota on our own.





Results of Operations





Three months ended March 31,
2010 vs. March 31, 2009





We did not conduct drilling activities
in the first quarter of 2010 or 2009. Our efforts have been focused on
soliciting funding or potential partners for our Drilling Program. We reduced
our legal fees by $36,000 per quarter beginning June 1, 2009, and our directors
fee expense by $12,500 per quarter effective April 1, 2009. Therefore, our
expenses are primarily administrative and our 2009 expenses remained consistent
with 2008 amounts.





14


COASTAL
CARIBBEAN OILS & MINERALS, LTD.
 FORM
10-Q
 PART
I - FINANCIAL INFORMATION
 
 March
31, 2010


ITEM 3 Quantitative and Qualitative
Disclosure About Market Risk





The Company does not have any
significant exposure to market risk as there were no investments in marketable
securities at March 31, 2010.





ITEM 4 Controls and
Procedures





a.
              Management’s
      annual report on internal control over financial
      reporting.





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 errors 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.




15




COASTAL
CARIBBEAN OILS & MINERALS, LTD.


FORM
10-Q


PART
II - OTHER INFORMATION





March
31, 2010




ITEM 1 Legal
Proceedings





During the third quarter of 2009, the
Company was involved as a defendant in a case entitled American Pipe & Supply Co. v.
Coastal Petroleum Company, et.al, Cause No. DV 08-63, in the Montana
Seventeenth Judicial District Court in Valley County, Montana. This claim is in
relation to the failure of our farmee, F-Cross, who has filed for bankruptcy, to
pay for pipe purchased from the Plaintiff to drill the State 7-16 well. The
claim seeks relief against Coastal Petroleum Company: to foreclose and oil and
gas lien on the single part of one lease involved which is held in Coastal
Petroleum Company’s name; and damages for breach of contract and quantum meruit
in the amount of about $80,000. Because the farmee has filed bankruptcy the
proceeding is in abeyance. Coastal has filed an answer and its counsel advises
it is likely that only the claim to foreclose the lien should withstand a motion
for summary judgment by Coastal. While it is likely that the Plaintiff will
obtain the lien, this lien would only apply to the small area under that
specific lease that was drilled.





Except as described in the preceding
paragraph, to the best knowledge of our management, there are no material
litigation matters pending or threatened against us.





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 may be
classified as a PFIC for the year 2009, because it derived the majority of its
gross income in 2009 from the relatively small amount of interest the Company
received. 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.





16





COASTAL
CARIBBEAN OILS & MINERALS, LTD.





FORM
10-Q





PART
II - OTHER INFORMATION





ITEM
5 Other
Information (Continued)





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,
2009.





17




COASTAL
CARIBBEAN OILS & MINERALS, LTD.


FORM
10-Q


PART
II - OTHER INFORMATION





March
31, 2010





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


March
31, 2010





SIGNATURES





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




COASTAL CARIBBEAN OILS & MINERALS,
      LTD.RegistrantDate:
      May 14, 2010
              By
              /s/
      Phillip W. WarePhillip
      W. WareChief
      Executive Officer,President
      and Treasurer
  19