TXCO Resources Reports Record Third-Quarter Oil and Gas Sales; Updates Current Field Operations

Business Wire, Oct 20, 2008

Fort Trinidad

In East Texas, TXCO has five wells targeting Glen Rose shoals in the Fort Trinidad Field in completion or drilling horizontal sidetracks. Results on these wells are expected by year end.

Marfa Basin

In West Texas, an advanced, 26-mile, 2-D swath seismic survey is nearing completion on TXCO's 147,000-acre lease block in the Marfa Basin. Processing of the data is expected to be completed by December.

Management Perspective

"TXCO had robust operating results in the third quarter and we are on pace to meet our target for record drilling activity in 2008," said CEO James E. Sigmon. "We believe our strong cash flow will enable us to fully fund our CAPEX requirements for the year. However, like all oil and gas companies, we are watching commodity prices closely and are prepared to scale back drilling if necessary.

"We are particularly excited about the results on our Pearsall gas shale play and the Eagleford oil shale play," Sigmon added. "We and our partners, EnCana, Anadarko and St. Mary, are in the planning stages to delineate our acreage positions by drilling additional horizontal wells. We now expect to add additional activity in the fourth quarter of this year and into 2009."

Earnings Announcement and Conference Call

TXCO will hold a conference call with investors, analysts and other interested parties, scheduled for November 5, to discuss third-quarter and nine-month 2008 financial results and current operations. The call will be broadcast live over the Internet at http://www.txco.com/concall.html. The Company will release earnings prior to the conference call.

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About TXCO Resources

TXCO Resources 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 estimated financial results, or expected prices, production volumes, well test results, reserve levels and number of drilling locations expected, drilling plans, including the timing, category, number, depth, cost and/or success of wells to be drilled, expected geological formations or the availability of specific services, equipment or technologies. 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 and accidental risk inherent in 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, impairment of oil and gas properties due to depletion or other causes, the uncertainties inherent in estimating quantities of proved reserves and cash flows, 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 TXCO's operating and financial results is included in TXCO's annual report on Form 10-K for the year ended December 31, 2007, and its Form 10-Q for the quarter ended June 30, 2008. These reports 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 from TXCO without charge.