Coastal Petroleum Company has entered an agreement with Lusora Healthcare Systems, Inc. to begin exploration for natural gas in part of Coastal’s Valley County, Montana leases.

The Formal Agreement begins a relationship between Coastal and Lusora which will allow not only the testing of Coastal’s shallow natural gas prospect, but if productive, the exploitation of the entire field for years to come. Under the Agreement, Coastal has already been paid $40,000 and $384,000 has been placed in trust to be released upon the granting of the first permit to test the prospect which is expected to be on or about September 15. Upon completion of the test well, Lusora will have the option to acquire a 50% interest in approximately 42,000 net acres of Coastal’s Leases near the test well for $1,000,000, payable in five equal installments the timing of which is tied to drilling step-out wells to evaluate the field.

Ware said, “We are excited to test the shallow gas prospect and we believe the team of Coastal and Lusora will be a profitable one for both parties.” Ware noted that the funds paid to Coastal before drilling will be used to pay not only for the drilling of the test well, but to cover annual lease rentals and to repay a loan that was taken to cover some of the lease rentals recently paid. The Agreement also allows the parties to work together to test deeper Lodgepole oil prospects identified on the Leases. This Agreement does not cover Coastal’s remaining 95,000 acres of leases in Valley County.