The Exploration Company Updates Maverick Basin Operations

This year, the Company has spudded or re-entered 20 wells on theblock, which covers approximately 727,000 gross acres. TXCO currentlyplans to drill 60-plus wells in its 2005 capital expenditure (CAPEX)program. Current drilling and operating highlights include:

Glen Rose

TXCO had good success with its latest Glen Rose porosity well. TheComanche 5-111H (50 percent working interest) went on production atthe end of May flowing 561 barrels of oil per day from the Glen Roseporosity on a 10/64-inch choke with no water. Drilling on anadditional Glen Rose porosity well, the Cage 1-45H (50% WI), began inmid May. Year to date, the Company has participated in these twowells, plus a porosity re-entry begun in the first quarter, now incompletion. Drilling on the next porosity well on the Comanche leasewill start shortly.

Since drilling began in 2002, TXCO has completed 20 of 30 porositywells with cumulative production in excess of 1.8 million barrels ofoil. The Glen Rose represents the second-largest portion of TXCO's2005 drilling program. The Company currently plans to drill six newwells and re-enter three existing wells by year end, targeting boththe oil-prone porosity and gas-prone Glen Rose shoal.

Georgetown

Through early June, TXCO had started 12 Georgetown drillingprojects, including 10 new wells and two re-entries/recompletions. Sixof the wells have been placed on production, one awaits a pipelineconnection, and five are in various stages of completion. Drilling onthe next well will start shortly. Since drilling began in late 2003using coherency seismic data, TXCO has completed 43 of 45 Georgetownwells.

TXCO has allocated the largest share of its 2005 CAPEX budget tothe successful Georgetown play with a projected 34 new wells and onere-entry. TXCO is adding compression to gas gathering lines servingthree of its Georgetown wells on the Company's Pena Creek prospect andexpects to increase production when service begins later this month.

Other Plays

TXCO has drilled two of the 12 San Miguel oil wells planned for2005. It spudded a third San Miguel well in late May. The Companyplans to stimulate the three wells before placing them on production.This year's CAPEX calls for six wells to formations besides theGeorgetown, Glen Rose and San Miguel. Through early June, the Companyhad placed one Edwards oil well on production and spudded three wellstargeting the Austin chalk oil play. Testing is under way on one, asecond is in completion while drilling is under way on a third. TheAustin Chalk represents yet another blanket formation present acrossmost of the Company's acreage block, offering significant reserve andproduction growth potential.

Management's Perspective

"The second quarter is shaping up to be a success as we continueour high-potential drilling program in the Maverick Basin," saidPresident and CEO James E. Sigmon. "We currently have five rigsrunning and are on target to reach our goal of more than 60 wells thisyear. We are closely monitoring sharply rising rig and tubular costsand rig availability. These factors may impact our 2005 drillingprogram going forward. That said, at current activity levels, it is mybelief that the Company will continue its growth trends in sales andreserves.

"The Maverick Basin provides a target-rich environment, exposingus to what we estimate to be a net unrisked potential of more than 7.5trillion cubic feet equivalent from multiple oil and gas plays on our727,000-acre position."

Presentation Scheduled

Vice President-Capital Markets Roberto R. Thomae will provide anupdate on TXCO's Maverick Basin drilling program to institutionalinvestors and securities analysts attending the RBC Capital MarketsNorth American Energy Conference, set for June 5-7 in Boston. Thepresentation has been posted on the Company's Web site atwww.txco.com.

About The Exploration Company

The Exploration Company is an independent oil and gas enterprisewith interests primarily in the Maverick Basin of Southwest Texas. TheCompany has a consistent record of long-term growth in its proved oiland gas reserves, leasehold acreage position, production and cash flowthrough its established exploration and development programs. Itsbusiness strategy is to build shareholder value by acquiringundeveloped mineral interests and internally develop a multi-yeardrilling inventory through the use of advanced technologies, such as3-D seismic and horizontal drilling. The Company accounts for its oiland gas operations under the successful efforts method of accountingand trades its common stock on the Nasdaq Stock Market under thesymbol "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-lookingstatements and are made pursuant to the safe harbor provisions of thePrivate Securities Litigation Reform Act of 1995. Such statementsinclude those relating to oil and gas prices, net unrisked potential,capital expenditures, production levels, drilling plans, including thetiming, number and cost of wells to be drilled, projects and expectedresponse, and establishment of reserves. It is important to noteactual results may differ materially from the results predicted in anysuch forward-looking statements. Investors are cautioned that allforward-looking statements involve risks and uncertainty, includingwithout limitation, the costs of exploring and developing new oil andnatural gas reserves, the price for which such reserves can be sold,environmental concerns affecting the drilling of oil and natural gaswells, as well as general market conditions, competition and pricing.More information about potential factors that could affect theCompany's operating and financial results is included in TXCO's annualreport on Form 10-K for the year ended Dec. 31, 2004, and its Form10-Q for the quarter ended March 31, 2005. These reports and allpreviously filed documents are on file at the Securities and ExchangeCommission and can be viewed on TXCO's Web site at www.txco.com.Copies are available from the Company without charge upon request.