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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
(Mark One)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the fiscal year ended December 31, 1996 or

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from __________________ to __________________

Commission file number 0-16693



                       COASTAL 1987 DRILLING PROGRAM, LTD.
             (Exact name of registrant as specified in its charter)

                  Texas                                      76-0214087
      (State or other jurisdiction                        (I.R.S. Employer
     of incorporation or organization)                   Identification No.)

              Coastal Tower
           Nine Greenway Plaza
             Houston, Texas                                  77046-0995
(Address of principal executive offices)                     (Zip Code)

            Registrant's telephone number, including area code: (713) 877-1400

                           ---------------------------

Securities registered pursuant to Section 12(b) of the Act:

     None

Securities registered pursuant to Section 12(g) of the Act:

     Units of Limited Partnership Interests

                           ---------------------------

     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, and (2) has been subject to such filing
requirements for the past 90 days. Yes   X     No ____

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     The required statement as to the aggregate market value of the voting stock
of the Registrant held by non-affiliates is not applicable as the Registrant is
a limited partnership.

Documents incorporated by reference:

     None.

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<PAGE>



                                TABLE OF CONTENTS

                                     PART I


Item                                                                      Page

   1.        Business ...................................................  1
   2.        Properties .................................................  3
   3.        Legal Proceedings ..........................................  3
   4.        Submission of Matters to a Vote of Security Holders ........  3



                                     PART II

   5.        Market for the Registrant's Common Equity and Related
               Stockholder Matters ......................................  4
   6.        Selected Financial Data ....................................  4
   7.        Management's Discussion and Analysis of Financial Condition
               and Results of Operations.................................  4
   8.        Financial Statements and Supplementary Data ................  4
   9.        Changes in and Disagreements with Accountants on Accounting
               and Financial Disclosure .................................  4



                                    PART III

  10.        Directors and Executive Officers of the Registrant..........  5
  11.        Executive Compensation......................................  6
  12.        Security Ownership of Certain Beneficial Owners and
               Management................................................ 14
  13.        Certain Relationships and Related Transactions.............. 18



                                                      PART IV

  14.        Exhibits, Financial Statement Schedules and Reports on Form
               8-K ...................................................... 19



<PAGE>



                                     PART I


Item 1.     Business.

      Coastal 1987 Drilling Program, Ltd. ("Partnership") was a limited
partnership organized under the laws of the State of Texas on March 27, 1987.
Its General Partner is Coastal Limited Ventures, Inc. ("CLV"), a Texas
corporation and a wholly-owned subsidiary of The Coastal Corporation
("Coastal"). The Partnership commenced operations on July 3, 1987.

      The operations of the Partnership consisted of operating, through a joint
venture ("Joint Venture") described below, gas and oil wells located in several
regions of the United States, which resulted from the Partnership's exploration
and development drilling program ("Program") completed in 1988.

      The Partnership and CLV have no employees. None of the officers of CLV
devoted full time to the activities of the Partnership.

      Under the terms of the Agreement of Limited Partnership dated as of March
27, 1987 (the "Partnership Agreement") and the Joint Venture Agreement dated as
of July 3, 1987 (the "Joint Venture Agreement"), both the Partnership and the
Joint Venture terminated on January 1, 1997. In accordance with the terms and
conditions of the Joint Venture Agreement, upon dissolution, each gas and oil
property will be sold or transferred to the Other Joint Venturer which assigned
the property to the Joint Venture at a value determined by independent
appraisal. After all Joint Venture assets have been liquidated and all Joint
Venture obligations have been paid, the remaining cash in the Joint Venture will
be distributed among the Joint Venturers. As among the Partners in the
Partnership, the liquidating distribution will be distributed 99% to the Limited
Partners and 1% to the General Partner. Final dissolution proceeds will be
distributed to the Limited Partners in May 1997. During the dissolution phase of
the Partnership, the General Partner shall act as liquidator and may be paid a
reasonable fee for acting as such. The amounts determined by the independent
appraisal which will be realized from the disposition of the remaining assets
may differ materially from the amounts in the accompanying financial statements.

      Joint Venture

      The Joint Venture which conducted the operations of the Partnership was a
Texas general partnership between the Partnership and three wholly-owned
subsidiaries of Coastal. The Partnership was the managing partner of the Joint
Venture. Coastal Oil & Gas Corporation, ANR Production Company and CIG
Exploration, Inc. were the Other Joint Venturers, each of which is a direct or
indirect, wholly-owned subsidiary of Coastal engaged primarily in gas and oil
exploration and production activities.

      The Other Joint Venturers contributed leasehold acreage having an agreed
value of $12,000,000 to the Joint Venture to provide the drilling blocks
("Drilling Blocks") upon which the exploratory and development wells were
drilled. The Partnership contributed $14,141,000 to the Joint Venture, including
$14,000,000 from the public offering of 14,000 units of limited partnership
interests ("Units"), which was expended for drilling, completing and equipping
Program wells.

      Crude oil and other liquid hydrocarbon production from Joint Venture wells
was generally subject to a preferential right and option of the Other Joint
Venturer to purchase such production at the higher of its posted field price or
the average of the highest three prices being paid for similar production in the
field. Production not sold to one of the Other Joint Venturers was sold at
negotiated prices. Gas production was sold at negotiated prices.

      During 1996, crude oil sales to Texaco Trading & Transportation and Koch
Oil Company and natural gas and crude oil, condensate and natural gas liquids
sales to Coastal subsidiaries accounted for 15%, 16% and 54%, respectively, of
the Joint Venture's gas and oil sales.



                                      - 1 -

<PAGE>



      Participation in Costs and Revenues

      Information as to participation by the Partnership and Joint Venture in
costs and revenues is set forth in Note 2 of Notes to Financial Statements
included herein.

      Pursuant to the Partnership Agreement, CLV received administrative fee
payments from the Partnership in lieu of allocating its administrative expenses
as discussed in Note 4 of Notes to Financial Statements included herein.

      The Partnership Payout balance was reduced by $279,000 during 1996 as
summarized in Note 3 of Notes to Financial Statements included herein, and at
year-end the balance was $9,409,000. Partnership Payout had not been achieved on
January 1, 1997, when the Partnership terminated. Revenues from the sale of
production and operating expenses of the Joint Venture were allocated 90% to the
Partnership and 10% to the Other Joint Venturers.

      Production Operations

      The following table presents production and sales price information for
1996, 1995 and 1994.

<TABLE>
<CAPTION>
                                                                                     Year Ended December 31,
                                                                               ----------------------------------
                                                                                 1996         1995         1994
                                                                               --------     --------     --------

<S>                                                                            <C>          <C>          <C>   
Production:

   Crude oil, condensate and natural gas liquids (barrels)................       24,550       29,084       35,648
   Gas (million cubic feet) ..............................................          115          133          144

Average sales price*:
   Crude oil, condensate and natural gas liquids, per barrel..............     $  17.06     $  14.51     $  13.84
   Gas, per thousand cubic feet ..........................................         2.02         1.35         1.65
<FN>
------------------------------------

*Net of severance taxes.
</FN>
</TABLE>

      For a discussion of "Operations," see "Management's Review," presented on
pages F-1 and F-2, included herein.



                                      - 2 -

<PAGE>



Item 2.     Properties.

      The following table sets forth information with respect to the producing
gas and oil properties in which the Partnership had an interest as of December
31, 1996.

      State/Field/County                                Oil          Gas
      ------------------                                ---          ---
      California
         Moonbend, Colusa County                          -            1
      Montana
         Crane, Richland County                           1            -
         Mondak West, Richland County                     1            -
      North Dakota
         East Fork, Williams County                       2            -
      Texas
         Dover, Garza County                              1            -
         Flores, Hidalgo County                           -            1
         LaPerla, Zapata County                           -            1
         South Tokio (Leonard), Terry County              1            -
         Panhandle, Moore County                          2            -
      Utah
         Altamont, Duchesne County                        1            -
         Bluebell, Duchesne County                        1            -
      Wyoming
         South Powell, Coverse County                     1            -
                                                        ---           --

              Total                                      11            3
                                                        ===           ==

      For information on proved reserves of the Partnership, see "Supplemental
Information on Exploration, Development and Production Activities," pages F-9 -
F-11, included herein.

Item 3.     Legal Proceedings.

      None.

Item 4.     Submission of Matters to a Vote of Security Holders.

      None.



                                      - 3 -

<PAGE>



                                                      PART II


Item 5.   Market for the Registrant's Common Equity and Related Stockholder
Matters.

      The Registrant had no common stock. Its ownership was represented by the
Units. There were 385 holders of Units as of December 31, 1996. There was no
market for the Units as transfer of Units was restricted. Under the Partnership
Agreement, Units were transferable only in the event of death, by operation of
law, or by a natural person by gift to family members, i.e., parents, spouses,
children and grandchildren or to a trust for the benefit of such family members.
The General Partner was required to offer, by May 1st of each year, commencing
in 1989 and ending in 1996, to repurchase Units as discussed in Note 5 of Notes
to Financial Statements included herein.

      Cash distributions to Limited Partners, which are paid quarterly, totaled
$11.65 per $1,000 Unit for 1996, $11.20 for 1995 and $16.10 for 1994.

Item 6.     Selected Financial Data.

      The following selected financial data (in thousands of dollars except per
Unit amounts) is derived from the Financial Statements included herein and Item
6 of the Partnership's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995. The Notes to Financial Statements included herein contain
other information relating to this data.

<TABLE>
<CAPTION>
                                                                        Year Ended December 31,
                                                     ------------------------------------------------------------
                                                       1996         1995         1994         1993         1992
                                                     --------     --------     --------     --------     --------
<S>                                                  <C>          <C>          <C>          <C>          <C>     
Revenues:
   Sale of gas and oil..........................     $    711     $    653     $    785     $    933     $  1,062
   Interest.....................................            5           16           11           21            6
                                                     --------     --------     --------     --------     --------
                                                          716          669          796          954        1,068

Net Earnings (Loss).............................          132          (95)          43          181           50

Net Earnings (Loss) per Unit....................         9.33        (6.72)        3.04        12.80         3.54

Total Assets at Year End........................        1,043        1,093        1,353        1,626        1,885

Cash Distribution per Unit......................        11.65        11.20        16.10        22.95         9.55


</TABLE>


Item 7.     Management's Discussion and Analysis of Financial Condition and
Results of Operations.

      Management's Discussion and Analysis of Financial Condition and Results of
Operations is presented on pages F-1 and F-2 herein.

Item 8.     Financial Statements and Supplementary Data.

      The Financial Statements and Supplementary Data required hereunder are
included in this Annual Report as set forth in Item 14(a) herein.

Item 9.     Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

      None.


                                      - 4 -

<PAGE>



                                    PART III


Item 10.    Directors and Executive Officers of the Registrant.

      The Partnership had no directors or executive officers. Its General
Partner was CLV. The following presents information with respect to the
directors and executive officers of CLV as of March 12, 1997:

Name (Age), Year First Elected
Director and/or Officer of CLV                  Positions and Offices with CLV
------------------------------                  -------------------------------
David A. Arledge (52), 1981                     Chairman of the Board and Chief
                                                   Executive Officer
Jerry D. Bullock (67), 1992                     President and Director
Coby C. Hesse (49), 1986                        Executive Vice President
Carl A. Corrallo (53), 1993                     Senior Vice President and
                                                   Director
Rodney D. Erskine (52), 1994                    Senior Vice President
Harvey R. Klingensmith (44), 1993               Senior Vice President and
                                                   Director
Austin M. O'Toole (61), 1980                    Senior Vice President, Secretary
                                                   and Director
Charles R. Carpenter (48), 1990                 Vice President
Fred H. Hallman (56), 1980                      Vice President and Controller
Wilson Humphrey (61), 1983                      Vice President
Gregory W. Hutson (45), 1989                    Vice President
Ronald D. Matthews (49), 1994                   Vice President and Treasurer
B. P. McCarley (61), 1980                       Vice President
John C. McKay (48), 1996                        Vice President
Dale V. Shultz (62), 1981                       Vice President

      The above named persons bear no family relationship to each other. Their
respective terms of office expire coincident with CLV's Annual Meeting of the
sole stockholder and Annual Meeting of the Board of Directors to be held in May
1997. Each of the officers named above have been officers of CLV and/or Coastal
for five years or more with the following exceptions:

      Mr. Bullock was elected Senior Vice President, exploration and production,
of Coastal in August 1992. From 1987 to 1990, he was an Executive Vice President
of British Petroleum's BP Exploration Company and a director and a member of the
management committee of BP Exploration USA. From 1990 to 1992, he was an
independent petroleum consultant for several major exploration companies.

      Mr. Corrallo was elected Senior Vice President and General Counsel of
Coastal in March 1993. He has served as a Senior Vice President of Coastal
States Management Corporation, a subsidiary of Coastal, since August 1991 and
prior thereto as Vice President since December 1986.

      Mr. Erskine was elected Senior Vice President, Production, of Coastal Oil
& Gas Corporation in February 1994. Prior to joining Coastal Oil & Gas, he had
been president and chief executive officer of Nerco Oil & Gas Inc., a subsidiary
of Kennecott, since 1991. From 1975 to 1991, he held a series of engineering and
executive positions with Union Texas Petroleum.

      Mr. Klingensmith was elected Senior Vice President of Coastal Oil & Gas
Corporation in October 1993. Prior to joining Coastal Oil & Gas, he was Vice
President - Exploration at Maxus Energy since 1989. From 1977 to 1989, he held a
series of engineering and executive positions with Maxus.



                                      - 5 -

<PAGE>



Item 11.    Executive Compensation.

      The Registrant had no executive officers or directors. It was managed by
CLV which received an annual administrative fee pursuant to the Partnership
Agreement as discussed in Note 4 of Notes to Financial Statements included
herein.

      CLV is an indirect, wholly-owned subsidiary of Coastal. Information
concerning the cash compensation and certain other compensation of the directors
and officers of Coastal is contained in this section.

Summary of Cash and Certain Other Compensation

      The following table sets forth information for the fiscal years ended
December 31, 1996, 1995 and 1994 as to cash compensation paid by Coastal and its
subsidiaries, as well as certain other compensation paid or accrued for those
years, to Coastal's Chief Executive Officer ("CEO") and its four other most
highly compensated executive officers (the "Named Executive Officers").

<TABLE>
                           Summary Compensation Table

<CAPTION>
                                                                             Long Term Compensation
                                                                         ------------------------------
                                     Annual Compensation<F1>                Awards           Payouts
                             ----------------------------------          ------------      ------------
                                                                          Securities                        All Other
                                                                          Underlying          LTIP           Compen-
Name and                                                                   Options/          Payouts         sation
Principal Position           Year       Salary ($)    Bonus ($)<F2>       SARs (#)<F3>       ($)<F4>          $<F5>
------------------           ----       ----------    ---------          ------------     -------------    ---------

<S>                          <C>          <C>             <C>               <C>              <C>                <C>   
O. S. Wyatt, Jr.,            1996         849,093         300,000               -0-                             67,928
Chairman of the Board        1995         849,093         300,000               -0-                             67,928
                             1994         849,093         200,000               -0-                             67,928

David A. Arledge,            1996         707,194         300,000           150,000                             56,576
President, CEO               1995         622,867         300,000            50,000          85,875             49,829
and Director                 1994         553,873         150,000               -0-                             44,310

James F. Cordes,<F6>         1996         592,223             -0-               -0-                             12,000
Executive V.P.               1995         592,223         135,000            15,000          42,937             47,378
and Director                 1994         592,223         130,000               -0-                             47,378

James A. King,               1996         343,823          80,000            10,000                             13,572
Executive V.P.               1995         343,823          80,000            10,000                             10,141
                             1994         343,823          75,000               -0-                              6,877

Jerry D. Bullock,            1996         249,147         160,000            10,000                              6,383
Senior V.P.                  1995         249,147          75,000            10,000                              6,766
                             1994         249,147          65,000               -0-                              3,383
<FN>
------------------------
<F1>
Does not include the value of perquisites and other personal benefits
because the aggregate amount of such compensation, if any, does not exceed the
lesser of $50,000 or 10 percent of annual salary and bonus for any named
individual.

<F2>
Bonuses are based on the following factors: the individual's position; the
individual's responsibility; and the individual's ability to impact Coastal's
financial success. See Committee Report on page 8.



                                      - 6 -

<PAGE>

<F3>
The options do not carry any stock appreciation rights.

<F4>
During 1995, Messrs. Arledge and Cordes received one-time cash payments in
the amounts indicated in connection with awards made in 1987 under Coastal's
Performance Unit Plan. No further awards have been made under this Plan.

<F5>
All Other Compensation for 1996 consists of: (i) Coastal ontributions to
the Coastal Thrift Plan (O. S. Wyatt, Jr. $12,000; David A. Arledge $12,000;
James F. Cordes $12,000; James A. King $6,000; and Jerry D. Bullock $6,000); and
(ii) certain payments in lieu of Thrift Plan contributions (O. S. Wyatt, Jr.
$55,927; David A. Arledge $44,576; James F. Cordes $-0-; James A. King $7,572;
and Jerry D. Bullock $383); these payments are made to all employees of Coastal
and its subsidiaries who participate in the Thrift Plan who must discontinue
their Thrift Plan participation due to federal statutory limits.

<F6>
Mr. Cordes retired as an officer of Coastal effective March 7, 1997.
</FN>
</TABLE>

Stock Options

      The following table sets forth information with respect to stock options
granted on March 1, 1996 for the fiscal year ended December 31, 1996 to the
Named Executive Officers.
<TABLE>
                                   Option/SAR Grants in Last Fiscal Year (1996)
<CAPTION>
                                Number of       Percent of Total
                               Securities         Options/SARs
                               Underlying          Granted to          Exercise                      Grant Date
                              Options/SARs        Employees in           Price       Expiration        Present
           Name                 Granted<F1>        Fiscal Year<F2>      ($/Sh)          Date         Value ($)<F3>
           ----              --------------     -----------------     ----------   --------------  --------------

<S>                              <C>                    <C>             <C>             <C>           <C>      
O. S. Wyatt, Jr.                    -0-                  -0-              -0-              -0-              -0-

David A. Arledge                 150,000                22.6            36.56           2/28/06       1,848,108

James F. Cordes                     -0-                  -0-              -0-              -0-              -0-

James A. King                     10,000                 1.5            36.56           2/28/06         123,207

Jerry D. Bullock                  10,000                 1.5            36.56           2/28/06         123,207
<FN>
---------------------
<F1>
Options expire ten years from the date of issuance and are granted at the
fair market value of the Common Stock of Coastal on the date of grant.
Options vest cumulatively at a rate of 20% of the option shares on each
anniversary date of the date of grant beginning with the second anniversary.

<F2>
The options do not carry any stock appreciation rights.

<F3>
Based on the Black-Scholes option pricing model expressed as a ratio .337 x
exercise price x number of shares. The actual value, if any, an executive may
realize will depend on the excess of the stock price over the exercise price on
the date the option is exercised, so that there is no assurance the value
realized by an executive will be at or near the value estimated by the
Black-Scholes model. The estimated values under that model are based on
assumptions that include (i) a stock price volatility of .1925, calculated using
monthly stock prices for the three years prior to the grant date, (ii) an
interest rate of 6.25%, (iii) a dividend yield of 1.40% and (iv) an expected
option holding period of eight years. No adjustments were made for the
non-transferability of the options or to reflect any risk of forfeiture prior to
vesting. The Securities and Exchange Commission ("S.E.C.") requires disclosure
of the potential realizable value or present value of each grant. Coastal's
use of the Black-Scholes model to indicate the present value of each grant is
not an endorsement of this valuation.
</FN>
</TABLE>
                                      - 7 -

<PAGE>



Option/SAR Exercises and Holdings

      The following table sets forth information with respect to the Named
Executive Officers, concerning the exercise of options during the last fiscal
year and unexercised options and SARs held as of the fiscal year ("FY") ended
December 31, 1996.

<TABLE>
                                Aggregated Option/SAR Exercises In Last Fiscal Year
                                        And FY-End Option/SAR Values (1996)

<CAPTION>
                                                                           Number of
                                                                          Securities              Value of
                                                                          Underlying             Unexercised
                                                                          Unexercised           In-the-Money
                                                                         Options/SARs           Options/SARs
                                                                         at FY-End (#)        at FY-End ($)<F1>

                           Shares Acquired                               Exercisable/           Exercisable/
        Name               on Exercise (#)      Value Realized ($)       Unexercisable          Unexercisable
--------------------    -------------------    --------------------    ----------------    ------------------
<S>                            <C>                  <C>               <C>                  <C>
O. S. Wyatt, Jr.               -0-                     -0-             -0-     /  -0-         -0-     /     -0-
David A. Arledge               55,000               1,118,737         187,373  / 228,000   3,943,307  /  3,595,560
James F. Cordes                30,000                 234,914          -0-     /  35,000      -0-     /    754,500
James A. King                  -0-                     -0-             26,000  /  24,000     599,800  /    432,200
Jerry D. Bullock                6,000                  69,920           2,000  /  27,000      41,760  /    491,860
<FN>
------------------
<F1>
$-based on the market price of $49.44 at December 31, 1996.
</FN>
</TABLE>

                COMPENSATION AND EXECUTIVE DEVELOPMENT COMMITTEE
                        REPORT ON EXECUTIVE COMPENSATION

      The following report has been provided by The Coastal Corporation's
Compensation and Executive Development Committee (the "Committee") of the Board
of Directors in accordance with current S.E.C. proxy statement disclosure
requirements. The members of the Committee include John M. Bissell (Chairman),
Roy D. Chapin, Jr., and Jerome S. Katzin.

      This material states Coastal's current overall compensation philosophy and
program objectives. Detailed descriptions of Coastal's compensation programs
are provided as well as the information on Coastal's 1996 pay levels for the
CEO.

Overall Objectives of the Executive Compensation Program

      Coastal's compensation philosophy and program objectives are directed
by two primary guiding principles. First, the program is intended to provide
fully competitive levels of compensation - at expected levels of performance -
in order to attract, motivate and retain talented executives. Second, the
program is intended to create an alignment of interests between Coastal's
executives and stockholders such that a significant portion of each executive's
compensation is directly linked to maximizing stockholder value.

      In support of this philosophy, the executive compensation program is
designed to reward performance that is directly relevant to Coastal's
short-term and long-term success. As such, Coastal attempts to provide both
short-term and long-term incentive pay that varies based on corporate and
individual performance.



                                      - 8 -

<PAGE>



      To accomplish these objectives, the Committee has structured the executive
compensation program with three primary underlying components: base salary,
annual incentives, and long-term incentives (i.e., stock options). The following
sections describe Coastal's plans by element of compensation and discuss how
each component relates to Coastal's overall compensation philosophy.

      In reviewing this information, reference is often made to the use of
competitive market data as criteria for establishing targeted compensation
levels. Coastal targets the market 50th percentile for its total compensation
program and actual total compensation rates in 1996 were at or below the
targeted level. (However, Coastal's competitive pay posture varies by pay
element, as described below.) Several market data sources are used by Coastal,
including energy industry norms for the publicly traded peer companies
included in Coastal's shareholder return performance graph, as reflected in
these companies' proxy statements. In addition, we utilize published survey data
and data obtained from independent consultants that are for general industry
companies similar in size (i.e., revenues) to Coastal. The published surveys
include data on over 50 companies of comparable size to Coastal, as measured
by revenues. Greater emphasis is placed on the published data and data obtained
from consultants than on the data for proxy peers, since the published data and
consulting data are reflective of company size.

Base Salary Program

      Coastal's base salary program is based on a philosophy of providing
base pay levels that fall between the market 50th and 75th percentiles. Coastal
periodically reviews its executive pay levels to assure consistency with
the external market. Generally, Coastal's actual base salary levels for 1996
for executives as a group were consistent with the targeted percentiles. We
believe it is crucial to provide strongly competitive salaries over time in
order to attract and retain executives who are highly talented.

      Annual salary adjustments for Coastal are based on several factors:
general levels of market salary increases, individual performance, competitive
base salary levels, and Coastal's overall financial results. Coastal reviews
performance qualitatively considering total shareholder returns, the level of
earnings, return on equity, return on total capital and individual business
unit performance. These criteria are assessed qualitatively and are not
weighted. All base salary increases are based on a philosophy of
pay-for-performance and perceptions of an individual's long-term value to
Coastal. As a result, employees with higher levels of performance sustained over
time will be paid correspondingly higher salaries.

The Annual Bonus Plan

      Coastal's Annual Bonus Plan is intended to (1) reward key employees
based on company/business unit and individual performance; (2) motivate key
employees; and (3) provide competitive cash compensation opportunities to plan
participants. Under the plan, target award opportunities vary by individual
position and are expressed as a percent of base salary. The individual target
award opportunities, which are slightly below market median levels, are then
aggregated into a total target pool which is adjusted as described below. The
amount a particular executive may earn is directly dependent on the individual's
position, responsibility, and ability to impact our financial success.

      The actual bonus pool is established each year by modifying the target
pool based on Coastal's overall performance against measures established by
the Committee. In fiscal year 1996, the key performance measure considered was
earnings before interest and taxes ("EBIT") against plan. This measure was
weighted 50% of the total bonus program. In 1996 Coastal's EBIT performance
was above threshold standards (minimum performance level for bonus payment) but
below a very aggressive plan, resulting in the EBIT portion of the bonus paid
being below target. The remaining 50% of the annual bonus opportunity in 1996 is
a discretionary annual bonus pool. As a result, no formula performance measures
were used in establishing the size of awards under this portion of the plan.
However, in establishing the size of the discretionary bonus pool, the Committee
considered Coastal's Return on Equity relative to industry peers (using the
same peers included in the shareholder return graph), Return on Total Capital
compared to industry peers, the EBIT performance of each business unit, progress
made toward improving Coastal's operational and financial performance, and
the need to reward unique individual contributions. These measures were not
formally weighted by the Committee. The size of the discretionary bonus pool
element was established above threshold but below target based on the


                                      - 9 -

<PAGE>



qualitative performance assessment described above. As a result, actual
bonus payments for 1996 were below target and median market levels.

      Individual awards from the established bonus pool are recommended by
senior management, with advice and consent from the Committee. Individual awards
from the pool are based on business unit and individual employee performance,
future potential, and competitive considerations. All individual performance
assessments are conducted in a non-formula fashion without specific goal
weightings. The total bonus awards made may not exceed the amount of funds in
the bonus pool.

Long-Term Incentive Plan

      Coastal's Long-Term Incentive Plan ("LTIP") is designed to focus
executive efforts on the long-term goals of Coastal and to maximize total
return to our shareholders. While Coastal's LTIP allows the Committee to use
a variety of long-term incentive devices, the Committee has relied solely on
stock option awards to provide long-term incentive opportunities in recent
years.

      Stock options align the interests of employees and shareholders by
providing value to the executive through stock price appreciation only. All
stock options have a ten-year term before expiration and are fully exercisable
within 6 years of the grant date.

      Stock options were granted to certain of the Named Executive Officers in
1996 and it is anticipated that stock option awards will be made periodically at
the discretion of the Committee in the future. As in past years, the number of
shares actually granted to a particular participant is also based on Coastal's
financial success, its future business plans, and the individual's position and
level of responsibility within Coastal. All of these factors are assessed
subjectively and are not weighted. Stock options granted by Coastal in 1996
were overall below market median levels.

1996 Chief Executive Officer Pay

      As previously described, the Committee considers several factors in
developing an executive's compensation package. For the CEO, these include
competitive market practices (consistent with the philosophy described for other
executives), experience, achievement of strategic goals, and the financial
success of Coastal (considering the factors described under the annual bonus
plan above).

David A. Arledge

      Mr. Arledge's annual salary was increased to $725,000 in 1996. This action
moved his salary closer to, but still below, the market median levels of salary
for the CEO position in companies of comparable size.

      Mr. Arledge's bonus for 1996 was $300,000, payable in 1997. This award was
below targeted levels (and below market median levels) since Coastal's aggregate
performance on the measures described in the annual bonus section of this report
were below the aggressive Coastal targets.

      The Committee granted stock options for 150,000 shares to Mr. Arledge in
1996 in recognition of his performance and as an incentive to continue his
efforts to increase shareholder value. These awards are tied to performance in
that the executive only realizes income from stock options if the stock price
rises. The grant is below market median levels for the executive positions held
by him.

$1 Million Pay Deductibility Cap

      Under Section 162(m) of the Internal Revenue Code, public companies are
precluded from receiving a tax deduction on compensation paid to executive
officers in excess of $1 million. To address the $1 million pay deductibility
cap issue, Coastal's 1996 LTIP is structured so that stock option awards
(which are intended to be the primary long-term incentive vehicle for the
present time) qualify for an exemption from the $1 million pay deductibility
limit.


                                     - 10 -

<PAGE>



      Also, at the present time, the Chairman of the Board of Directors and the
CEO are the only executives whose base salary plus target bonus exceeds $1
million. In order to preserve Coastal's tax deduction for base salary plus
bonus for these individuals, Coastal has established a nonqualified deferred
compensation program. Under this program, any annual incentive awards that bring
cash compensation to a level over $1 million may be deferred so that payments
occur after the individual is no longer a Named Executive Officer, thus
preserving the deductibility of the pay for Coastal.

                            Compensation and Executive Development Committee

                            John M. Bissell, Chairman
                            Roy D. Chapin, Jr.
                            Jerome S. Katzin



                                     - 11 -

<PAGE>



Pension Plan

      The following table shows for illustration purposes the estimated annual
benefits payable currently under the Pension Plan and Coastal's Replacement
Pension Plan described below upon retirement at age 65 based on the compensation
and years of credited service indicated.

<TABLE>
                                                Pension Plan Table

<CAPTION>
                                                              Years of Credited Service
      5-Year Final                     --------------------------------------------------------------------
      Average Pay                      15 Years       20 Years        25 Years       30 Years      35 Years
      -----------                      --------------------------------------------------------------------

      <S>                            <C>             <C>            <C>             <C>           <C>      
      $    125,000.................  $   33,920      $  45,226      $   56,533      $  67,840     $  67,044
           150,000.................      41,420         55,226          69,033         82,840        82,044
           200,000.................      41,420         55,226          69,033         82,840        82,044
           250,000.................      41,420         55,226          69,033         82,840        82,044
           300,000.................      41,420         55,226          69,033         82,840        82,044
           350,000.................      41,420         55,226          69,033         82,840        82,044
           400,000.................      41,420         55,226          69,033         82,840        82,044
           500,000.................      41,420         55,226          69,033         82,840        82,044
           600,000.................      41,420         55,226          69,033         82,840        82,044
         1,000,000.................      41,420         55,226          69,033         82,840        82,044
         1,200,000.................      41,420         55,226          69,033         82,840        82,044
<FN>
(A)   Compensation covered under the Pension Plan for employees of Coastal
      and the Coastal Replacement Pension Plan generally includes only base
      salary and is limited to $150,000 for 1996.

(B)  Federal legislation has reduced the benefit which may be earned due to
     future service; however, benefits previously earned may not be reduced. At
     December 31, 1996 each of the individuals named in the Summary Compensation
     Table had covered salary for future benefit accrual of $150,000 and the
     following years of credited service and pension payable at age 65 (or
     current age, if over 65): Mr. Wyatt, 41 years, $460,768; Mr. Arledge, 16
     years, $59,289; Mr. Cordes, 19 years, $81,059; Mr. King, 4 years $14,798
     (not vested); and Mr. Bullock, 4 years, $14,132 (not vested). Mr. Wyatt
     reached age 70 1/2 in January, 1995 and because of IRS requirements
     concerning Coastal's qualified pension plan he began receiving pension
     payments in April, 1996. These payments amounted to $282,775.

(C)   The normal form of retirement income is a straight life annuity. Benefits
      payable under the Pension Plan are subject to offset by 1.5% of applicable
      monthly social security benefits multiplied by the number of years of
      credited service (up to 331/3 years).
</FN>
</TABLE>

      The Employee Retirement Income Security Act of 1974, as amended by
subsequent legislation, limits the retirement benefits payable under the
tax-qualified Pension Plan. Where this occurs, Coastal will provide to certain
executives, including persons named in the Summary Compensation Table,
additional nonqualified retirement benefits under a Coastal Replacement Pension
Plan. These benefits, plus payments under the Pension Plan, will not exceed the
maximum amount which Coastal would have been required to provide under the
Pension Plan before application of the legislative limitations, and are
reflected in the above table and footnote (B).



                                     - 12 -

<PAGE>



             PERFORMANCE GRAPH - SHAREHOLDER RETURN ON COMMON STOCK

                                    [GRAPH]

<TABLE>
                                            Five-Year Cumulative Values
                                              $100 Invested 12/31/91
                                               Dividends Reinvested
<CAPTION>
                                                      DOLLAR VALUE OF $100 INVESTMENT AT DECEMBER 31,
                                       -----------------------------------------------------------------------
                                        1991          1992         1993         1994         1995         1996
                                        ----          ----         ----         ----         ----         ----

<S>                                  <C>             <C>          <C>          <C>          <C>          <C> 
Coastal                              $   100         $  99        $ 118        $ 109        $ 157        $ 207
S&P 500                                  100           108          118          120          165          203
Index<F1><F2>                            100           112          132          119          128          196

<FN>
<F1>
The Index is based on Value Line's Diversified Natural Gas Group - the
Performance Graph reflects total shareholder return weighted to reflect the
market capitalization of the peer companies. The peer group is comprised of:
Burlington Res., Cabot, Columbia, Consolidated Nat. Gas, Eastern Enterprises,
Enron, Enserch, Equitable Res., KN Energy, Mitchell Energy, National Fuel Gas,
Noram Energy, Panhandle Eastern, Questar, Seagull Energy, Sonat, Southwestern
Energy, Valero and Williams Cos.

<F2>
Coastal is excluded from the Index.
</FN>
</TABLE>

Transactions with Management and Others

      In 1987, Coastal Mart, Inc. ("Coastal Mart"), a subsidiary of Coastal,
entered into a ten-year lease/purchase agreement with Pester Marketing Company
("Pester Marketing") for 220 gasoline service stations (subsequently reduced to
182 stations through disposition of assets) located in the midwestern region of
the United States. Jack Pester, a principal stockholder and Chief Executive
Officer of Pester Marketing, subsequently became an employee, officer and
director of Coastal Mart and was elected a Senior Vice President of Coastal.
Mr. Pester is no longer active in the management of Pester Marketing, and his
stock interest in that company has been placed in trust. In 1994, the lease
transaction was terminated pursuant to an agreement under which Coastal Mart
acquired ownership of and title to 175 of the gasoline service stations and
Pester Marketing retained the seven remaining stations.

      During 1996, Coastal and/or its subsidiaries sold approximately
14,576,400 gallons of gasoline to Pester Marketing at prevailing market prices
totaling approximately $10,036,200.




                                     - 13 -

<PAGE>



Item 12.  Security Ownership of Certain Beneficial Owners and Management.

      (a)  Security Ownership of Certain Beneficial Owners.

      Holders of Units were entitled to vote only as to certain specific
matters. The following table sets forth information, as of December 31, 1996,
with respect to CLV and to each person known or believed by CLV to be the
beneficial owner of five percent or more of the Units, the only class of
securities of the Registrant outstanding.

<TABLE>
<CAPTION>
                                                               Amount and Nature of                     Percent
Name and Address of Beneficial Owner                           Beneficial Ownership*                   of Class
------------------------------------                           --------------------                    --------
<S>                                                                   <C>                                  <C> 
Coastal Limited Ventures, Inc.                                        4,822                                34.4
Nine Greenway Plaza
Houston, TX  77046

Massachusetts Mutual Life Insurance Co.                               2,000                                14.3
1295 State Street
Springfield, MA  01111

Warren H. and Susan K. Heller                                         1,000                                 7.1
515 West Buckey Road
Phoenix, AZ  85003

O. S. Wyatt, Jr.                                                        750                                 5.4
Nine Greenway Plaza
Houston, TX  77046

<FN>
*     CLV believes that each holder of Units has sole voting and investment power.
</FN>
</TABLE>

      (b)   Security Ownership of Management.

      CLV is an indirect, wholly-owned subsidiary of Coastal. Information
concerning the security ownership of certain beneficial owners and management of
Coastal is contained in this section.

      The total number of shares of stock of Coastal outstanding as of March 12,
1997 is 113,995,018: consisting of 59,068 shares of $1.19 Cumulative Convertible
Preferred Stock, Series A (the "Series A Preferred Stock"); 72,398 shares of
$1.83 Cumulative Convertible Preferred Stock, Series B (the "Series B Preferred
Stock"); 31,940 shares of $5.00 Cumulative Convertible Preferred Stock, Series C
(the "Series C Preferred Stock"); 8,000,000 non-voting shares of $2.125
Cumulative Preferred Stock, Series H; 105,451,513 shares of Common Stock, and
380,099 shares of Class A Common Stock.

      Each voting share of Common Stock or Preferred Stock entitles the holder
to one vote with respect to all matters to come before a shareholders' meeting
while each share of Class A Common Stock entitles the holder to 100 votes.
However, 25% of Coastal's directors standing for election at each annual meeting
will be determined solely by holders of the Common Stock and voting Preferred
Stock voting as a class.



                                     - 14 -

<PAGE>



      The following table sets forth information, as of March 12, 1997, with
respect to each person known or believed by Coastal to be the beneficial owner,
who has or shares voting and/or investment power (other than as set forth
below), of more than five percent (5%) of any class of its voting securities.

<TABLE>
<CAPTION>
      Name and Address                                                                                 Percent (%)
     of Beneficial Owner                       Title of Class             Number of Shares            of Class <F1>
     -------------------                     ------------------           ----------------            ------------

<S>                                     <C>                                 <C>                            <C> 
O. S. Wyatt, Jr.                            Class A Common Stock               154,577  <F2>               40.4
Chairman of the Board
of Coastal
Nine Greenway Plaza
Houston, Texas 77046-0995

Trustee/Custodian under the                     Common Stock                12,344,644  <F3>               11.7
Thrift Plan, ESOP and                       Class A Common Stock                64,429  <F3>               16.8
Pension Plan of Coastal
and its subsidiaries
Texas Commerce Bank
 National Association
600 Travis, 10th Floor
Houston, Texas  77002

FMR Corp.                                       Common Stock                 7,411,815                      7.0
82 Devonshire Street
Boston, Massachusetts 02109

Isabel H. Long                            Series A Preferred Stock              28,976                     49.1
485 S. Parkview Ave.,
Columbus, Ohio  43209-1075

The DeZurik Family                        Series C Preferred Stock              31,940  <F4>              100.0
c/o David DeZurik
2460 S.E. 8th St.
Pompano Beach, Florida 33062
<FN>
----------

<F1>
Class includes presently exercisable stock options held by directors and
executive officers.

<F2>
Includes 7,354 shares of Class A Common Stock owned by the spouse and a son
of Mr. Wyatt, as to which shares beneficial ownership is disclaimed.

<F3>
The Trustee/Custodian is the record owner of these shares; and also is the
record owner of 742 shares of the Series B Preferred Stock, each of which is
convertible into 3.6125 shares of Common Stock and 0.1 share of Class A Common
Stock. Voting instructions are requested from each participant in the Thrift
Plan and ESOP and from the trustees under a Pension Trust. Absent timely voting
instructions, the Trustee is permitted to vote Thrift Plan and ESOP shares on
any matter, but has no authority to vote Pension Plan shares. Nor does the
Trustee/Custodian have any authority to dispose of shares except pursuant to
instructions of the administrator of the Thrift Plan and ESOP or pursuant to
instructions from the trustees under the Pension Trust.

<F4>
Members of the DeZurik family acquired the Series C Preferred Stock in
connection with a 1972 Agreement of Merger involving the acquisition of Colorado
Interstate Gas Company, a subsidiary of Coastal.
</FN>
</TABLE>



                                     - 15 -

<PAGE>



      The following table sets forth information, as of March 12, 1997,
regarding each of the current directors, including Class II directors standing
for election, and all directors and executive officers as a group. Each director
has furnished the information with respect to age, principal occupation and
ownership of shares of stock of the Coastal. Messrs. Arledge, Brundrett, Wooddy
and Wyatt are Class II directors whose terms expire in 1997; Messrs. Cordes,
Gates, Johnson and McDade are Class III directors whose terms expire in 1998;
and Messrs. Bissell, Burrow, Chapin and Katzin are Class I directors whose terms
expire in 1999.

<TABLE>
<CAPTION>
                                                                                                  Number of Shares
   Name, (Age), Year          Offices with Coastal                                                  Beneficially         Percent (%)
 First Became Director     and/or Principal Occupation                    Title of Class              Owned<F1>           of Class*
 ---------------------     ---------------------------                    --------------          ----------------      -----------

<S>                       <C>                                             <C>                        <C>                    <C>
O. S. Wyatt, Jr.          Chairman of the Board                           Common Stock               2,858,863  <F2>         2.7
(72), 1955                                                                Class A Common Stock         154,577  <F2>        40.4

Harold Burrow             Vice Chairman of the Board;                     Common Stock                 137,127  <F2>
(82), 1973                Chairman of Colorado Interstate Gas             Class A Common Stock          13,601               3.6
                          Company and American Natural
                          Resources Company

David A. Arledge          President and                                   Common Stock                 181,112
(52), 1988                Chief Executive Officer                         Class A Common Stock           2,352

John M. Bissell           Chairman of the Board                           Common Stock                   5,080
(66), 1985                of Bissell Inc.                                 Class A Common Stock             -0-

George L. Brundrett, Jr.  Attorney                                        Common Stock                   4,910
(75), 1973                                                                Class A Common Stock           2,290

Roy D. Chapin, Jr.        Former Chairman and                             Common Stock                   3,250  <F2>
(81), 1988                Chief Executive Officer                         Class A Common Stock             -0-
                          of American Motors Corporation

James F. Cordes           Retired; former Executive Vice                  Common Stock                  18,708
(56), 1985                President of Coastal                            Class A Common Stock             -0-

Roy L. Gates              Ranching and Investments                        Common Stock                   4,095
(68), 1969                                                                Class A Common Stock           2,736

Kenneth O. Johnson        Senior Vice President                           Common Stock                  40,020
(76), 1988                                                                Class A Common Stock           9,604               2.5

Jerome S. Katzin          Retired Investment Banker                       Common Stock                  41,803
(78), 1983                                                                Class A Common Stock             -0-

Thomas R. McDade          Senior Partner, Law Firm of McDade,             Common Stock                     500
(64), 1993                Fogler, Maines & Lohse L.L.P., Houston          Class A Common Stock             -0-

L. D. Wooddy, Jr.         Retired; Former President of Exxon              Common Stock                   3,000
(70), 1992                Pipeline Company                                Class A Common Stock             -0-

All directors and executive officers as a group                           Common Stock               3,711,260  <F3>         3.5
(33 persons, including the above)                                         Class A Common Stock         186,568  <F3>        48.8

                        (See footnotes on following page)
<FN>

      *    Less than one percent unless otherwise indicated. Class includes
           outstanding shares and presently exercisable stock options held by
           directors and executive officers. Excluding presently exercisable
           stock options, directors and executive officers as a group would own
           184,288 shares of Class A Common Stock, which would constitute 48.5%
           of the shares of such class.


                                     - 16 -

<PAGE>



<F1>
Except for the shares referred to in Notes 2 and 3 below, and the shares
represented by presently exercisable stock options, the holders are believed by
Coastal to have sole voting and investment power as to the shares indicated.
Amounts include shares in Coastal ESOP and Thrift Plan, and presently
exercisable stock options held by Messrs. Arledge (162,093 shares of Common
Stock and 2,280 shares of Class A Common Stock), Cordes (8,000 shares of Common
Stock), and Johnson (7,848 shares of Common Stock).

<F2>
Includes shares owned by the spouse and a son of Mr. Wyatt (266,895 shares of
Common Stock and 7,354 shares of Class A Common Stock), by the spouse of Mr.
Burrow (5,000 shares of Common Stock) and by the spouse of Mr. Chapin (1,000
shares of Common Stock), as to which shares beneficial ownership is disclaimed.

<F3>
Includes presently exercisable stock options to purchase 453,829 shares of
Common Stock and 2,280 shares of Class A Common Stock; also includes 280,928
shares of Common Stock and 7,354 shares of Class A Common Stock owned by spouses
and children, as to which shares beneficial ownership is disclaimed. In
addition, one executive officer owns 8 shares of Series B Preferred Stock, each
of which is convertible into 3.6125 shares of Common Stock and 0.1 share of
Class A Common Stock.
</FN>
</TABLE>

      No incumbent director is related by blood, marriage or adoption to another
director or to any executive officer of Coastal or its subsidiaries or
affiliates.

      Except as hereafter indicated, the above table includes the principal
occupation of each of the directors during the past five years. The listed
executive officers have held various executive positions with Coastal, American
Natural Resources Company, ANR Pipeline Company and/or Colorado Interstate Gas
Company during the five-year period.

      Mr. Bissell is a member of the Boards of Directors of Old Kent Financial
Corporation and Batts Inc.

      Mr. Cordes is a member of the Board of Directors of Comerica Inc.

      Mr. Katzin is a member of the Board of Directors of Qualcomm Incorporated.

      Mr. McDade is a trial lawyer and the founding senior partner of the
Houston law firm of McDade, Fogler, Maines & Lohse L.L.P. Prior to forming
McDade, Fogler, Maines & Lohse L.L.P., he was a senior partner in the Houston
law firm of Fulbright & Jaworski. He is a member of the Board of Directors of
Equity Corporation International.

      Messrs. Arledge and Burrow are directors of Colorado Interstate Gas
Company and ANR Pipeline Company. Both of these subsidiaries of Coastal are
subject to the reporting requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act").


                                     - 17 -

<PAGE>



     The following table sets forth information, as of December 31, 1996,
concerning ownership of units of limited partnership interests in the Coastal
1987 Drilling Program, Ltd., by directors and all directors and executive
officers as a group.

<TABLE>
<CAPTION>
                                                                                           1987
                                                                                        ($1,000 Unit)
                                                                                   --------------------
Directors                                                                          Units        Percent*
---------                                                                          -----        -------
<S>                                                                                 <C>          <C>
O. S. Wyatt, Jr. ............................................................       750          5.4
Harold Burrow ...............................................................       100            -
David A. Arledge ............................................................         -            -
John M. Bissell .............................................................         -            -
George L. Brundrett, Jr. ....................................................         -            -
Roy D. Chapin, Jr. ..........................................................        20            -
James F. Cordes .............................................................         -            -
Roy L. Gates ................................................................         -            -
Kenneth O. Johnson ..........................................................         -            -
Jerome S. Katzin ............................................................         -            -
Thomas R. McDade.............................................................         -            -
L. D. Wooddy, Jr.............................................................         -            -
All directors and executive
  officers as a group (33 persons,
  including the above) ......................................................       890          6.4
<FN>
-----------------------

*     Less than 1% unless otherwise indicated.
</FN>
</TABLE>

      (c)  Changes in Control.

      Coastal knows of no arrangement which may, at a subsequent date, result in
a change in control of Coastal or CLV.

Item 13.   Certain Relationships and Related Transactions.

      The General Partner and the Other Joint Venturers are Coastal
subsidiaries, as discussed in Item 1 herein, and the directors of CLV are
officers and/or directors of one or more Coastal subsidiaries, or of Coastal, as
indicated in Item 10 herein. CLV receives payments from the Partnership of
administrative fees and the Partnership has account balances with the Other
Joint Venturers, as described in Note 4 of Notes to Financial Statements
included herein. Certain production, in which the Partnership has an interest,
is being sold to Coastal subsidiaries, as discussed in Item 1 herein. During
1996, sales of natural gas amounting to $228,000 and sales of crude oil,
condensate and natural gas liquids amounting to $153,000 were made to Coastal
subsidiaries at market value.

      Additional information called for by this item is set forth under Item 11,
"Executive Compensation," and Note 4 of Notes to Financial Statements included
herein.

      (b)  Certain business relationships.

           None.

      (c)  Indebtedness of management.

           None.

      (d)  Transactions with promoters.

           Not applicable.


                                     - 18 -

<PAGE>



                                     PART IV


Item 14.   Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a) The following documents are filed as part of this report or incorporated
herein by reference.

      1.   Financial statements of Registrant and supplemental information
           included in response to Item 8 herein.

                                                                          Page

           Independent Auditors' Report.................................   F-3

           Balance Sheet - December 31, 1996 and 1995...................   F-4

           Statement of Partners' Capital for the years ended
           December 31, 1996, 1995 and 1994.............................   F-4

           Statement of Operations for the years ended
           December 31, 1996, 1995 and 1994.............................   F-5

           Statement of Cash Flows for the years ended
           December 31, 1996, 1995 and 1994.............................   F-5

           Notes to Financial Statements ...............................   F-6

           Supplemental Information on Exploration, Development
           and Production Activities (unaudited) .......................   F-9

      2.   Financial statement schedules.

           Schedules are omitted as not applicable or not required, or the
           required information is shown in the Financial Statements or Notes
           thereto.

      3.   Exhibits.

            3.1+  Agreement of Limited Partnership.

            3.2+  Certificate of Limited Partnership.

           10.1+  Joint Venture Agreement among Coastal 1987 Drilling Program,
                  Ltd., Coastal Oil & Gas Corporation, ANR Production Company
                  and CIG Exploration, Inc.

            24*   Powers of Attorney (included on signature page herein).

            27*   Financial Data Schedule



      +Incorporated by reference from Registration Statement No. 33-13096.
      *Indicates filed herewith.

(b)   Reports on Form 8-K.

      No reports on Form 8-K were filed during the last quarter of 1996.


                                     - 19 -

<PAGE>

                               POWERS OF ATTORNEY


      Each person whose signature appears below hereby appoints David A.
Arledge, Coby C. Hesse and Austin M. O'Toole and each of them, any one of whom
may act without the joinder of the others, as his attorney-in-fact to sign on
his behalf and in the capacity stated below and to file all amendments to this
Annual Report on Form 10-K, which amendment or amendments may make such changes
and additions thereto as such attorney-in-fact may deem necessary or
appropriate.

                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) 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 1987 DRILLING PROGRAM, LTD.
(Registrant)

By Its General Partner,
Coastal Limited Ventures, Inc.


By:   JERRY D. BULLOCK
      ----------------------------------------
      Jerry D. Bullock
      President and Chief Executive Officer
      March 24, 1997

      Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.


By:   DAVID A. ARLEDGE
      ----------------------------------------
      David A. Arledge
      Principal Financial Officer and Director
      March 24, 1997

By:   COBY C. HESSE
      ----------------------------------------
      Coby C. Hesse
      Principal Accounting Officer
      March 24, 1997

By:   JERRY D. BULLOCK
      ----------------------------------------
      Jerry D. Bullock
      Director
      March 24, 1997

By:   CARL A. CORRALLO
      ----------------------------------------
      Carl A. Corrallo
      Director
      March 24, 1997

By:   HARVEY R. KLINGENSMITH
      ----------------------------------------
      Harvey R. Klingensmith
      Director
      March 24, 1997

By:   AUSTIN M. O'TOOLE
      ----------------------------------------
      Austin M. O'Toole
      Director
      March 24, 1997


                                     - 20 -

<PAGE>



                               MANAGEMENT'S REVIEW


Management's Discussion and Analysis of Financial Condition and Results of
Operations


                         LIQUIDITY AND CAPITAL RESOURCES

      Effective January 1, 1997, the Partnership terminated in accordance with
the provisions for dissolution set forth in the Partnership Agreement as
summarized in Note 1 of Notes to Financial Statements. Final dissolution
proceeds will be distributed in May 1997. Partnership Payout, as defined in Note
3 to the accompanying financial statements, had not been achieved on the
termination date.

                              RESULTS OF OPERATIONS

      Annual changes shown in this discussion are in comparison with the year
immediately preceding.

Production

      Natural gas production decreased 18 million cubic feet (14%) in 1996 and
11 million cubic feet (8%) in 1995. The 1996 decrease was primarily due to
normal production declines. The decrease in 1995 was primarily attributable to
decreased production from the La Perla Ranch Field in South Texas due to market
conditions in the area.

      Production of crude oil, condensate and natural gas liquids decreased
4,534 barrels (16%) in 1996 and 6,564 barrels (18%) in 1995. The 1996 and 1995
decreases were primarily due to normal production declines in various fields.

Revenues

      Revenues from the sale of production increased $58,000 (9%) in 1996 and
decreased $132,000 (17%) in 1995.

      Natural gas revenues increased $51,000 (25%) in 1996 and decreased $58,000
(22%) in 1995. The 1996 increase was attributable to higher net weighted average
prices, partially offset by decreased production volumes. The decrease in 1995
was the result of decreased production volumes and lower net weighted average
prices.

      Crude oil, condensate and natural gas liquids revenues increased $7,000
(2%) in 1996 and decreased $74,000 (14%) in 1995. The increase in 1996 was
attributable to a higher net weighted average price, partially offset by
decreased production volumes. The 1995 decrease was the result of decreased
production volumes, partially offset by a higher net weighted average price.

      Interest and other income decreased $11,000 (69%) in 1996 and increased
$5,000 (45%) in 1995. The changes are due to varying levels of cash available
for investment purposes and miscellaneous income from operations.

Operating Expenses

      Lease operating expenses decreased $25,000 (6%) in 1996 and $37,000 (8%)
in 1995. The 1996 decrease was primarily due to decreased maintenance expenses.
The reduction in 1995 was primarily attributable to decreased production taxes.

Administrative Fee

      Administrative fees decreased $8,000 (11%) in 1996 as a result of a
restructuring of the fee by the General Partner.



                                       F-1

<PAGE>



Depreciation and Amortization

      Depreciation and amortization decreased $147,000 (62%) in 1996 and
increased $48,000 (25%) in 1995. The 1996 decrease was primarily a result of
decreased carrying value charges, a decreased rate and decreased production
volumes. The increase in 1995 was primarily as a result of a non-cash charge of
$86,000 being recorded so that the net investment in gas and oil properties
would not exceed the estimated future net revenues from proved reserves,
computed at prices at the end of the reported period, and discounted at 10% as
required under the full-cost method of accounting for gas and oil properties,
partially offset by a decreased rate and decreased production volumes.

Cash Distributions

      Cash distributions to Limited Partners since commencement of operations
were (December distribution is made in the subsequent February):

<TABLE>
<CAPTION>
                                                                            Amount Per Unit
                                                     -------------------------------------------------------------
      Period Ended                                     1996         1995         1994         1993         1992
      ------------                                   --------     --------     --------     --------     ---------

      <S>                                            <C>          <C>          <C>          <C>          <C>      
      March 31...................................    $   2.80     $   1.55     $   3.45     $   5.00     $    1.55
      June 30....................................        2.00         2.60         4.50         7.75          1.50
      September 30...............................        3.30         3.70         5.70         4.80          1.50
      December 31................................        3.55         3.35         2.45         5.40          5.00
                                                     --------     --------     --------     --------     ---------
         Total...................................    $  11.65     $  11.20     $  16.10     $  22.95     $    9.55
                                                     ========     ========      =======     ========     =========

      Cumulative.................................    $ 237.15     $ 225.50     $ 214.30     $ 198.20     $  175.25
                                                     ========     ========     ========     ========     =========
</TABLE>


<TABLE>
<CAPTION>
                                                                            Amount Per Unit
                                                     -------------------------------------------------------------
      Period Ended                                     1991         1990         1989         1988         1987
      ------------                                   --------     --------     --------     --------     ---------

      <S>                                            <C>          <C>          <C>          <C>          <C>      
      March 31...................................    $   1.00     $   2.30     $   4.40     $      -     $       -
      June 30....................................           -        28.85         2.80         4.30             -
      September 30...............................           -         3.40         2.15         7.00         11.65
      December 31................................       67.15         6.45         2.15         2.50         19.60
                                                     --------     --------     --------     --------     ---------

         Total...................................    $  68.15     $  41.00     $  11.50     $  13.80     $   31.25
                                                     ========     ========     ========     ========     =========

      Cumulative.................................    $ 165.70     $  97.55     $  56.55     $  45.05
                                                     ========     ========     ========     ========
</TABLE>

      The 1991 fourth quarter distribution includes proceeds attributable to the
sale of Program wells in the Roaring Fork Field in Virginia.


                                       F-2

<PAGE>






                          INDEPENDENT AUDITORS' REPORT



To the Partners of
Coastal 1987 Drilling Program, Ltd.
Houston, Texas

      We have audited the accompanying balance sheets of Coastal 1987 Drilling
Program, Ltd. (a Texas limited partnership) as of December 31, 1996 and 1995 and
the related statements of partners' capital, operations and cash flows for each
of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

      We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, such financial statements present fairly, in all material
respects, the financial position of Coastal 1987 Drilling Program, Ltd. as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.

      As discussed in Note 1 to the financial statements, both the Partnership
and the Joint Venture terminated on January 1, 1997, under the terms of the
Partnership Agreement and the Joint Venture Agreement. The amounts determined by
the independent engineer which will be realized from the disposition of the
remaining assets may differ materially from the amounts in the accompanying
financial statements.


DELOITTE & TOUCHE LLP





Houston, Texas
March 4, 1997



                                       F-3

<PAGE>

<TABLE>
                       COASTAL 1987 DRILLING PROGRAM, LTD.
                          (A TEXAS LIMITED PARTNERSHIP)

                                  BALANCE SHEET
                             (Thousands of Dollars)
<CAPTION>
                                                                                                 December 31,
                                                                                            ----------------------
                                                                                              1996         1995
                                                                                            --------     ---------
<S>                                                                                         <C>          <C>      
ASSETS

     CURRENT ASSETS:
         Cash and cash equivalents.....................................................     $     51     $      48
         Accounts receivable - affiliates..............................................          148           122
                                                                                            --------     ---------
              TOTAL CURRENT ASSETS.....................................................          199           170
                                                                                            --------     ---------

     GAS AND OIL PROPERTIES - at full-cost.............................................       17,762        17,751
         Less accumulated depreciation and amortization................................       16,918        16,828
                                                                                            --------     ---------
                                                                                                 844           923
                                                                                            --------     ---------
                                                                                            $  1,043     $   1,093
                                                                                            ========     =========

LIABILITIES AND PARTNERS' CAPITAL

     CURRENT LIABILITIES:
         Accounts payable - affiliates.................................................     $    169     $      98
     LONG TERM LIABILITIES:
         Accounts payable - affiliate..................................................            -            86
     PARTNERS' CAPITAL.................................................................          874           909
                                                                                            --------     ---------
                                                                                            $  1,043     $   1,093
                                                                                            ========     =========
</TABLE>



<TABLE>
                         STATEMENT OF PARTNERS' CAPITAL
                             (Thousands of Dollars)


                                                                                     Year Ended December 31,
                                                                               -----------------------------------
                                                                                 1996         1995         1994
                                                                               --------     --------     ---------

<S>                                                                            <C>          <C>          <C>      
GENERAL PARTNER:
     Balance, beginning of year...........................................     $      9     $     11     $      14
     Net earnings (loss)..................................................            1           (1)            -
     Distributions........................................................           (1)          (1)           (3)
                                                                               --------     --------     ---------
         Balance, end of year.............................................            9            9            11
                                                                               --------     --------     ---------

LIMITED PARTNERS:
     Balance, beginning of year...........................................          900        1,143         1,374
     Net earnings (loss)..................................................          131          (94)           43
     Distributions........................................................         (166)        (149)         (274)
                                                                               --------     --------     ---------
         Balance, end of year.............................................          865          900         1,143
                                                                               --------     --------     ---------
                                                                               $    874     $    909     $   1,154
                                                                               ========     ========     =========
</TABLE>

                       See Notes to Financial Statements


                                       F-4

<PAGE>

<TABLE>
                       COASTAL 1987 DRILLING PROGRAM, LTD.
                         (A TEXAS LIMITED PARTNERSHIP)

                             STATEMENT OF OPERATIONS
           (Thousands of Dollars Except per Limited Partnership Unit)

<CAPTION>
                                                                                     Year Ended December 31,
                                                                               -----------------------------------
                                                                                 1996         1995         1994
                                                                               --------     --------     ---------
<S>                                                                            <C>          <C>          <C>      
REVENUES:
     Sale of gas and oil:
         Affiliates.......................................................     $    381     $    227     $     266
         Non-affiliates...................................................          330          426           519
                                                                               --------     --------     ---------
                                                                                    711          653           785
     Interest and other...................................................            5           16            11
                                                                               --------     --------     ---------
                                                                                    716          669           796
                                                                               --------     --------     ---------

COSTS AND EXPENSES:
     Lease operating......................................................          426          451           488
     Administrative fee - affiliate.......................................           68           76            76
     Depreciation and amortization........................................           90          237           189
                                                                               --------     --------     ---------
                                                                                    584          764           753
                                                                               --------     --------     ---------

NET EARNINGS (LOSS).......................................................     $    132     $    (95)    $      43
                                                                               ========     ========     =========

NET EARNINGS (LOSS) PER LIMITED PARTNERSHIP UNIT..........................     $   9.33     $  (6.72)    $    3.04
                                                                               ========     ========     =========
</TABLE>

<TABLE>
                             STATEMENT OF CASH FLOWS
                             (Thousands of Dollars)
<CAPTION>
                                                                                     Year Ended December 31,
                                                                               -----------------------------------
                                                                                 1996         1995         1994
                                                                               --------     --------     ---------
<S>                                                                            <C>          <C>          <C>      
Cash flows from operating activities:
     Net earnings (loss)..................................................     $    132     $    (95)    $      43
                                                                               --------     --------     ---------
     Adjustments to reconcile net earnings (loss) to
      net cash provided by operating activities:
         Depreciation and amortization....................................           90          237           189
         Increase in accounts receivable - affiliates.....................          (26)         (27)          (23)
         Decrease in accounts payable - affiliates........................          (15)         (15)          (39)
                                                                               --------     --------     ---------
         Total adjustments................................................           49          195           127
                                                                               --------     --------     ---------
         Net cash provided by operating activities........................          181          100           170
                                                                               --------     --------     ---------

Cash flows from investing activities:
     Capital expenditures.................................................          (11)         (16)            -
     Proceeds from the sale of property and equipment.....................            -           74            38
                                                                               --------     --------     ---------
         Net cash provided (used) by investing activities.................          (11)          58            38
                                                                               --------     --------     ---------

Cash flows from financing activities:
     Distributions paid...................................................         (167)        (150)         (277)
                                                                               --------     --------     ---------
         Net increase (decrease) in cash and cash equivalents.............            3            8           (69)
         Cash and cash equivalents at beginning of the year...............           48           40           109
                                                                               --------     --------     ---------
         Cash and cash equivalents at end of the year.....................     $     51     $     48     $      40
                                                                               ========     ========     =========
</TABLE>
                        See Notes to Financial Statements

                                       F-5

<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

Note 1.  Summary of Significant Accounting Policies

Organization and Basis of Presentation

      Coastal 1987 Drilling Program, Ltd. (the "Partnership") commenced
operations on July 3, 1987, as a Texas Limited Partnership to participate in
drilling development and exploratory wells located in the United States on
leasehold acreage held by subsidiaries of The Coastal Corporation ("Coastal").
The Partnership was funded primarily through the sale of 14,000 Limited
Partnership Units providing $14,000,000. Under the terms of the Partnership
Agreement, the General Partner, Coastal Limited Ventures, Inc., a wholly-owned
subsidiary of Coastal, incurred all costs of organizing the Partnership and
contributed 1% of the total capital, or $141,000, as general partner capital.

      The drilling operations were conducted through a joint venture in the form
of a Texas general partnership (the "Joint Venture") between the Partnership and
three wholly-owned subsidiaries of Coastal ("Other Joint Venturers"). For
financial reporting purposes, the Partnership's investment in such venture has
been accounted for by consolidating its share of the operating results of the
venture.

      All costs and revenues of the Partnership were allocated 1% to the General
Partner and 99% to the Limited Partners. Net earnings (loss) per Limited
Partnership Unit was calculated by dividing the net earnings (loss) attributable
to Limited Partners by the 14,000 units outstanding.

      Under the terms of the Partnership Agreement and the Joint Venture
Agreement, both the Partnership and the Joint Venture terminated on January 1,
1997. In accordance with the terms and conditions of the dissolution, each gas
and oil property will be sold or transferred to the Other Joint Venturer which
assigned the property to the Joint Venture at a value determined by independent
appraisal, (see "Partnership Interest in Proved Reserves" on page F-10). After
all Joint Venture assets have been liquidated and all Joint Venture obligations
have been paid, the remaining cash in the Joint Venture will be distributed
among the Joint Venturers. As among the Partners in the Partnership, the
liquidating distribution will be distributed 99% to the Limited Partners and 1%
to the General Partner in May 1997. The amounts determined by the independent
appraisal which will be realized from the disposition of the remaining assets
may differ materially from the amounts in the accompanying financial statements.

Statement of Cash Flows

      Cash equivalents include time deposits, certificates of deposit and all
highly liquid instruments with original maturities of three months or less.

Gas and Oil Properties

      The Partnership followed the full-cost method of accounting for gas and
oil properties. Under this method, all costs incurred in the exploration and
development of gas and oil properties, including unproductive wells, were
capitalized. Depreciation and amortization of gas and oil properties was
provided on the unit-of-production basis whereby the unit rate was determined by
dividing the total unrecovered carrying value of all gas and oil properties plus
future development costs by the estimated proved reserves included therein, as
estimated by an independent engineer, adjusted so that the net investment in gas
and oil properties did not exceed the estimated future net revenues from proved
reserves, computed at prices at the end of the reported period, discounted at
10%. The depreciation and amortization rates amounted to $0.35, $0.44 and $0.53
per equivalent unit of a thousand cubic feet of natural gas production during
1996, 1995 and 1994, respectively.

      No property acquisition costs were recorded by the Partnership since all
drilling blocks were contributed to the Joint Venture by the Other Joint
Venturers. Development costs (recovery of costs) recorded by the Partnership
during 1996, 1995 and 1994 were $11,000, ($58,000) and ($38,000), respectively.
The development costs were attributable to capitalized well maintenance
activities and abandonments, net of salvage.

Taxes

      No provision for income tax expense is reflected in the financial
statements since the income and deductions of the Partnership are reported on
the separate tax returns of the individual partners. State severance taxes are
classified as lease operating expenses.

                                       F-6

<PAGE>

Note 2.  Participation in Costs and Revenues

      Under the terms of the Partnership and Joint Venture Agreements, revenues,
costs and expenses were allocated on the following basis:

<TABLE>
<CAPTION>
                                                                                                      Other Joint
                                                                                   Partnership         Venturers
                                                                                   -----------        -----------
<S>                                                                                     <C>                <C> 
      Assignments of Development and Exploratory
         Well Drilling Blocks and Overriding Royalty Interests                            0%               100%

      Cost of Drilling, Completing and Equipping Wells                                  100%                 0%

      Repayment of Joint Venture Note and Interest                                      100%                 0%

      Operating Costs                                                                    90%                10%

      Revenues from Drilling Blocks                                                      90%                10%

      Revenues from Overriding Royalty Interests                                        100%                 0%
</TABLE>

      All costs and revenues of the Partnership were allocated 1% to the General
Partner and 99% to the Limited Partners.

Note 3.  Partnership Payout

      Partnership Payout is defined in the Partnership Agreement as the close of
business on the last day of the calendar month during which revenues from the
sale of production less operating costs of the Joint Venture allocated to the
Partnership and less amounts applied to pay in full the principal of, and
interest on, the Joint Venture Note plus gains on the sale or other disposition
of Joint Venture assets credited to the capital account of the Partnership plus
interest earned after July 3, 1987 (effective date of operations), by the
Partnership plus any contributions distributed pro rata to the Partners as a
return of capital, first equal the sum of $14,141,000 plus Permitted Excess
Drilling Costs, if any. Partnership Payout had not been achieved at the
termination of the Partnership. Partnership Payout status is (Thousands of
Dollars):

<TABLE>
<S>                                                                                         <C>          <C>      
     Balance at December 31, 1993......................................................                  $  10,310

     Less 1994:
         Production Revenues...........................................................     $    785
         Interest and Other Income.....................................................           11
         Lease Operating Costs.........................................................         (488)
         Proceeds from Sale of Property, net of Capitalized Operating Costs............           38           346
                                                                                            --------     ---------

     Balance at December 31, 1994......................................................                      9,964

     Less 1995:
         Production Revenues...........................................................          653
         Interest Income...............................................................           16
         Lease Operating Costs.........................................................         (451)
         Proceeds from Sale of Property, net of Capitalized Operating Costs............           58           276
                                                                                            --------     ---------

     Balance at December 31, 1995......................................................                      9,688

     Less 1996:
         Production Revenues...........................................................          711
         Interest Income...............................................................            5
         Lease Operating Costs.........................................................         (426)
         Capitalized Operating Costs...................................................          (11)          279
                                                                                            --------     ---------

     Balance at December 31, 1996......................................................                  $   9,409
                                                                                                         =========
</TABLE>


                                       F-7

<PAGE>



Note 4.  Transactions with Related Parties

Accounts with Affiliated Companies

      The accounts receivable - affiliates and accounts payable - affiliates
balances are with the General Partner and Other Joint Venturers, and resulted
from provisions of the Partnership Agreement, Joint Venture Agreement and
transactions in the ordinary course of business as more fully explained in the
following paragraphs.

Fee to General Partner

      Under terms of the Partnership Agreement, the General Partner was entitled
to an annual fee (paid in quarterly installments) of $400,000 in 1987, $300,000
in 1988 and $200,000 in each year from 1989 through 1996 in lieu of general and
administrative overhead costs. The cumulative amount of such fee paid at any
point in time could not exceed 15% of the Partnership's cumulative revenues
received up to and including that point in time, with any remaining balance due
carried forward and paid in subsequent quarters. However, the General Partner
reduced the management fee to $68,000, $76,000 and $76,000 in 1996, 1995 and
1994, respectively, as a result of restructuring of the fee by the General
Partner. Fees paid to the General Partner totaled $97,000, $91,000 and $114,000
in 1996, 1995 and 1994, respectively. As of December 31, 1996, there was a
remaining balance of $81,000 payable to the General Partner.

Balances with Other Joint Venturers

      Such balances arose in the normal course of business from advance payments
or billings for development and exploratory drilling activities, the sale of gas
and oil production, and the operating costs of producing wells. In 1996, two
unrelated companies accounted for more than 10% of gas and oil sales for the
Joint Venture. In 1995 and 1994, three unrelated companies accounted for more
than 10% of gas and oil sales from the Joint Venture. The Partnership's share of
these sales was $225,000, $279,000 and $355,000 in 1996, 1995 and 1994,
respectively. All costs and revenues were allocated to the respective parties as
indicated in Note 2.

Sales to Affiliated Companies

      During 1996, 1995 and 1994, sales of natural gas amounting to $228,000,
$171,000 and $215,000, respectively, and sales of crude oil, condensate and
natural gas liquids amounting to $153,000, $56,000 and $51,000, respectively,
were made to Coastal subsidiaries at market value.

Note 5.  Repurchase of Partnership Units

      In accordance with the terms of the Partnership Agreement, the General
Partner repurchased units tendered by Limited Partners commencing in 1989 and in
each succeeding year through 1996. The purchase price of units was determined
annually as of the preceding calendar year-end in accordance with the
Partnership Agreement. During the 1996 repurchase period, 190 of the 9,368
eligible units were tendered by Limited Partners and were purchased by the
General Partner. In 1995, 219 units were tendered and purchased. As of December
31, 1996, the General Partner held 4,822 of the 14,000 units outstanding.


                                       F-8

<PAGE>

                          SUPPLEMENTAL INFORMATION ON
               EXPLORATION, DEVELOPMENT AND PRODUCTION ACTIVITIES
                                   (Unaudited)

Introduction

      This section presents information on Partnership and Joint Venture costs,
revenues, reserves and estimates of future gas and oil operations. The estimates
of gas and oil reserves and future net cash flows from gas and oil production
were prepared by independent engineers, Huddleston & Co., Inc., Houston, Texas.

Total Costs

      Total costs shown in the following tables were allocated as indicated in
Note 2 to the accompanying financial statements. (Thousands of Dollars)

<TABLE>
<CAPTION>
                                                                          Allocation of Joint Venture Costs
                                                                  ------------------------------------------------
                                                                                        Other             Total
      July 3, 1987                                                                      Joint             Joint
      (Effective Date of Operations) to December 31, 1996           Partnership       Venturers          Venture
      ---------------------------------------------------         --------------    -------------    -------------
      <S>                                                          <C>               <C>               <C>        
      Capital Costs <F1>
          Development.........................................     $    15,090       $       (36)      $    15,054
          Exploratory.........................................           2,672                 5             2,677
      Operating Costs <F2>....................................           5,809               640             6,449
                                                                   -----------       -----------       -----------
          Total Joint Venture Costs...........................     $    23,571       $       609       $    24,180
                                                                   ===========       ===========       ===========

      Year Ended December 31, 1996
      ----------------------------
      Capital Costs <F1>
          Development.........................................     $        11       $         1       $        12
      Operating Costs <F2>....................................             426                47               473
                                                                   -----------       -----------       -----------
          Total Joint Venture Costs...........................     $       437       $        48       $       485
                                                                   ===========       ===========       ===========
<FN>
<F1>
Includes capitalized operating costs.

<F2>
Excludes depreciation and amortization expense and capitalized operating costs.
</FN>
</TABLE>

<TABLE>
                                                                           Allocation of Partnership Costs
                                                                  --------------------------------------------------
      July 3, 1987                                                    Limited          General            Total
      (Effective Date of Operations) to December 31, 1996            Partners          Partner         Partnership
      ---------------------------------------------------         --------------    -------------    ---------------
      <S>                                                          <C>               <C>               <C>        
      Capital Costs <F1>
          Development.........................................     $    14,940       $       150       $    15,090
          Exploratory.........................................           2,645                27             2,672
      Operating Costs <F2>....................................           5,752                57             5,809
      General Partner's Compensation..........................           1,303                14             1,317
      Loan Interest Costs.....................................             784                 8               792
                                                                   -----------       -----------       -----------
          Total Partnership Costs.............................     $    25,424       $       256       $    25,680
                                                                   ===========       ===========       ===========

      Year Ended December 31, 1996
      ----------------------------
      Capital Costs <F1>
          Development.........................................     $        11       $         -       $        11
      Operating Costs <F2>....................................             422                 4               426
      General Partner's Compensation..........................              67                 1                68
                                                                   -----------       -----------       -----------
          Total Partnership Costs.............................     $       500       $         5       $       505
                                                                   ===========       ===========       ===========
<FN>
<F1>
Includes capitalized operating costs.

<F2>
Excludes depreciation and amortization expense and capitalized operating costs.
</FN>
</TABLE>
                                       F-9

<PAGE>

Total Revenues

     Total revenues for the cumulative period from July 3, 1987 (effective date
of operations), to December 31, 1996, and for the year ended December 31, 1996,
are shown in the following tables. Revenues were allocated as indicated in Note
2 to the accompanying financial statements. (Thousands of Dollars)

<TABLE>
<CAPTION>
                                                                                          Production Revenues
                                                                                    ------------------------------
                                                                                     Cumulative           1996
                                                                                    -------------      -----------

      <S>                                                                           <C>                <C>        
      Limited Partners.......................................................       $      13,904      $       704
      General Partner........................................................                 141                7
                                                                                    -------------      -----------
          Total Partnership..................................................              14,045              711
      Other Joint Venturers..................................................               1,558               79
                                                                                    -------------      -----------
          Total Joint Venture................................................       $      15,603      $       790
                                                                                    =============      ===========
</TABLE>



<TABLE>
<CAPTION>
                                                                                       Interest and Other Income
                                                                                    ------------------------------
                                                                                     Cumulative           1996
                                                                                    -------------      -----------

      <S>                                                                           <C>                <C>        
      Limited Partners.......................................................       $         448      $         5
      General Partner........................................................                   4                -
                                                                                    -------------      -----------
          Total Partnership..................................................                 452                5
      Other Joint Venturers..................................................                   -                -
                                                                                    -------------      -----------
          Total Joint Venture................................................       $          73      $         3
                                                                                    =============      ===========
</TABLE>


Partnership Interest in Proved Reserves

      Presented below are the quantities associated with the Partnership's
interest in estimated proved reserves as of December 31, 1993, 1994, 1995 and
1996. Also included are the changes in net quantities for the years ended
December 31, 1994, 1995 and 1996. Natural gas is stated in millions of cubic
feet. Oil includes condensate and natural gas liquids and is stated in barrels.


<TABLE>
      Total Proved Developed Reserves                                                    Gas               Oil
      -------------------------------                                                -----------      ------------
      <S>                                                                            <C>              <C>    
      Total, end of 1993........................................................           1,625           182,393
      Revisions of previous estimates...........................................             122            24,119
      Production during 1994....................................................            (144)          (35,648)
                                                                                     -----------      ------------

      Total, end of 1994........................................................           1,603           170,864
      Revisions of previous estimates...........................................             208            34,252
      Production during 1995....................................................            (133)          (29,084)
                                                                                     -----------      ------------

      Total, end of 1995........................................................           1,678           176,032
      Revisions of previous estimates...........................................              69            57,533
      Production during 1996....................................................            (115)          (24,550)
                                                                                     -----------      ------------

      Total, end of 1996........................................................           1,632           209,015
                                                                                     ===========      ============
</TABLE>



                                      F-10

<PAGE>



      Presented below is an estimate of the Partnership's interest at December
31, 1996, 1995 and 1994, in future net cash flows from the Joint Venture proved
reserves, a standardized measure of discounted future net cash flows, and the
commensurate standardized measure per Limited Partnership Unit. (Thousands of
Dollars except per Limited Partnership Unit)

<TABLE>
<CAPTION>
                                                                              1996           1995          1994
                                                                            ---------     ---------      ---------

      <S>                                                                   <C>           <C>            <C>      
      Future Cash Inflows................................................   $  10,824     $   6,719      $   5,806

      Future Production and Development Cost.............................      (4,306)       (3,618)        (2,921)
                                                                            ---------     ---------      ---------

      Future Net Cash Flows..............................................       6,518         3,101          2,885

      10% Annual Discount for Estimated Timing
         of Cash Flows...................................................      (2,764)       (1,403)        (1,345)
                                                                            ---------     ---------      ---------

      Standardized Measure of Discounted Future
         Net Cash Flows..................................................   $   3,754     $   1,698      $   1,540
                                                                            =========     =========      =========

      Standardized Measure of Discounted Future Net Cash Flows
         Per Limited Partnership Unit....................................   $  265.46     $  120.07      $  108.90
                                                                            =========     =========      =========
</TABLE>

      The standardized measure of discounted future net cash flows per Limited
Partnership Unit is calculated in accordance with Securities and Exchange
Commission regulationsand should not be construed as the liquidation price of
units as described in Note 1 of Notes to Financial Statements included herein.

      The Partnership's interest in the net quantities of gas and oil reserves
and the Partnership's interest in the standardized measure of discounted future
net cash flows for 1996, 1995 and 1994, were calculated by the independent
engineers using a discount factor of 10%. In addition, the calculations did not
include provisions for income taxes and were based on year-end prices, as
adjusted for existing contractual agreements, and costs with no provision for
escalations or reductions thereof. The upward revision attributed to oil in 1994
was primarily due to the production from various program wells exceeding
previously recognized quantity estimates. In 1995, the upward revisions were
primarily attributable to the production from various program wells exceeding
previously recognized quantity estimates. The upward revision attributed to 1996
was primarily due to the performance of various wells exceeding previously
recognized quantity estimates and the projected increase in commercially
recoverable quantities due to higher prices.

      In the opinion of the General Partner, the above estimates do not
necessarily represent the current value of the reserves or of future net cash
flows which may reasonably be expected to be realized from future production.



                                      F-11

<PAGE>



                                  EXHIBIT INDEX


Exhibit
Number                                     Document
-------                               ------------------
   3.1+       Agreement of Limited Partnership.

   3.2+       Certificate of Limited Partnership.

  10.1+       Joint Venture Agreement among Coastal 1987 Drilling Program, Ltd.,
              Coastal Oil & Gas Corporation, ANR Production Company and CIG
              Exploration, Inc.

   24*        Powers of Attorney (included on signature page herein).

   27*        Financial Data Schedule.

---------------------------
   +Incorporated by reference from Registration Statement No. 33-13096.
   *Indicates filed herewith.