The Exploration Company announces debt conversion

Business Wire, Sept 18, 1996

SAN ANTONIO--(BUSINESS WIRE)--Sept. 18, 1996--The Exploration Company announced Wednesday that several debenture holders had converted a total of $433,484 of the company's long-term debt to equity.

The debenture holders will receive 173,394 shares under the terms of the promissory notes. The outstanding debenture held by W.A. Oil & Gas Loan Trust has now been reduced by nearly 25 percent to $1,331,213. With the conversion, approximately 9,900,000 shares are outstanding in The Exploration Company.

The debenture holders indicated they were prompted to convert by the Board of Directors' decision to distribute approximately 50 percent of the assets of the company's wholly-owned subsidiary, ExproFuels, Inc.

Shareholders of record as of the close of trading on Sept. 13, 1996 will receive one share of ExproFuels' stock for every five shares of The Exploration Company stock then owned.

ExproFuels, Inc., a Delaware corporation, converts gasoline and diesel engines to operate on compressed natural gas (CNG), liquefied petroleum gas (LPG) and liquefied natural gas (LNG).

It specializes in designing, building, owning, operating and providing fuel for alternative fuel stations and currently owns and operates 19 LPG fueling stations across Texas. The Exploration Company is retaining approximately 40 percent ownership of ExproFuels.

The Exploration Company is an oil and gas exploration and production company, with interests in Texas, North Dakota and Montana. It is publicly traded on the NASDAQ exchange under the symbol "TXCO".

CONTACT: The Exploration Company

James E. Sigmon, president, 210/496-5300

210/496-3232 (fax)