TXCO Resources Signs Exploration Agreement Expanding Its Maverick Basin Pearsall Resource Play

Business Wire, April 4, 2008

SAN ANTONIO -- TXCO Resources Inc. (Nasdaq:TXCO) today announced it has signed an agreement with Anadarko Petroleum Corporation (NYSE:APC) that gives rights to drill the Pearsall and Eagleford shale gas resource plays on Anadarko's 349,000 gross acres in the Maverick Basin of Southwest Texas. In addition, TXCO has entered into an agreement with St. Mary Land & Exploration Company (NYSE:SM) whereby St. Mary will participate with TXCO in the development of the Anadarko acreage.

Under the joint exploration agreement, TXCO and St. Mary can earn certain interests in Anadarko's lease block by drilling four horizontal wells in the Pearsall and/or Eagleford formations by year-end 2008. TXCO and St. Mary have the option to extend the drilling program through year-end 2013, at which time TXCO and St. Mary could earn as much as a 50 percent working interest in the acreage that will be split equally. After the wells are completed, Anadarko would retain a 50 percent carried working interest and serve as operator. TXCO will operate the drilling and completing of the four proposed 2008 wells, sharing costs equally with St. Mary. TXCO is preparing to spud the first of these wells in April.

Anadarko's leasehold of 349,000 gross acres is located in Maverick, Dimmit, Webb and LaSalle counties, generally south and east of the 708,000 gross acres TXCO holds in Maverick, Dimmit and Zavala counties.

"The Pearsall shale gas resource play is one of our key growth catalysts," said CEO James E. Sigmon. "TXCO's initial results in drilling the Pearsall shale have been encouraging, and we believe this unconventional, tight gas formation has great potential to create new production and reserves for TXCO and our two fine partners in this promising joint venture. The Eagleford shale is a major source for hydrocarbons in the Maverick Basin and has the potential of developing into a large resource play."

About TXCO Resources

TXCO Resources, formerly The Exploration Company, is an independent oil and gas enterprise with interests in the Maverick Basin, the onshore Gulf Coast region and the Marfa Basin of Texas, and the Midcontinent region of western Oklahoma. It has a consistent record of long-term growth in its proved oil and gas reserves, leasehold acreage position, production and cash flow through its established exploration and development programs. TXCO's business strategy is to build shareholder value by acquiring undeveloped mineral interests and internally developing a multi-year drilling inventory through the use of advanced technologies, such as 3-D seismic and horizontal drilling. It accounts for its oil and gas operations under the successful efforts method of accounting and trades its common stock on Nasdaq's Global Select Market under the symbol "TXCO."

Forward-Looking Statements

Statements in this press release that are not historical, including statements regarding TXCO's or management's intentions, hopes, beliefs, expectations, representations, projections, estimations, plans or predictions of the future, are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements include those relating to budget and drilling plans, capital expenditures, production levels, the timing, number and cost of wells to be drilled, new projects and expected response, and establishment of reserves. It is important to note that actual results may differ materially from the results predicted in any such forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation, the costs of exploring and developing new oil and natural gas reserves, the price for which such reserves can be sold, environmental concerns affecting the drilling of oil and natural gas wells, as well as general market conditions, competition and pricing. TXCO undertakes no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. More information about potential factors that could affect the Company's operating and financial results is included in TXCO's annual report on Form 10-K for the year ended December 31, 2007. These and all previously filed documents are on file at the Securities and Exchange Commission and can be viewed on TXCO's Web site at www.txco.com. Copies are available without charge, upon request from the Company.