Txco Resources (TXCOQ) 8-K The Exploration Company Reports Financial Results

			Exhibit 99
For Immediate Release		Contact Information
Monday, August 8, 2005		Investors: Roberto R. Thomae
		(210) 496-5300 ext. 214, bthomae@txco.com
		Media: Paul Hart
		(210) 496-5300 ext. 264, pdhart@txco.com
The Exploration Company Reports Financial Results
SAN ANTONIO -- Aug. 8, 2005 -- The Exploration Company (Nasdaq:TXCO) today reported financial results for the second quarter and first half of 2005. Highlights include:
-   Record assets of $125 million. - -   Record revenues. - -   Continued strong cash flow. - -   Higher commodity sales volumes.
For the quarter ended June 30, revenues were $15.5 million, a 6 percent increase from $14.6 million in the 2004 period. Both commodity sales volumes and prices were higher than in the April-June 2004 period, partially offset by lower gas gathering revenues. Assets at June 30 were a record $124.6 million, up 9 percent from $114.2 million at year-end 2004.
The Company recorded a net loss of $1.0 million for the quarter, equal to $0.04 per share, compared with net income of $372,000, or $0.01 per share, for second-quarter 2004. All per-share amounts are on a diluted basis. The quarterly loss was due primarily to non-cash adjustments, including depletion and derivative mark-to-market losses, plus dry hole costs and higher operating costs. Excluding the derivative losses, the net loss for the quarter would have been $397,000. The derivatives were placed in connection with TXCO's existing credit facility. The Company did not use derivatives in the 2004 periods. Income from operations was $568,000, compared with $1.1 million in the year-earlier period.
For the 2005 first half, revenues rose to a record $30.1 million, up 16 percent from $26.0 million for the first six months of 2004. Income from operations was $1.7 million, compared with $2.0 million a year earlier. Commodity sales and prices, and gas gathering revenues, were higher for the half.
Due primarily to non-cash adjustments, including a mark-to-market derivative loss of $3.7 million, and depletion and dry hole costs mentioned above, TXCO recorded a $4.3 million net loss for the half, equal to $0.15 per share. Net income in the first half of 2004 was $441,000, or $0.02 per share. Excluding the derivative losses, the Company's net loss for the half would have been $135,000.
-- More --

          Net cash provided by operating activities for the first half was $9.6 million, up from $5.2 million recorded in the year-earlier period. Excluding changes in operating assets and liabilities, cash flow from operations was $10.2 million, up 51 percent from $6.7 million for the first half of 2004. Ebitdax -- earnings before income taxes, interest, depreciation, depletion, amortization, impairment, abandonment and exploration expense -- rose to $10.3 million, a 21 percent increase from $8.5 million in the prior-year period. Ebitda -- Ebitdax less exploration expense -- rose to $9.0 million from $7.8 million in the 2004 period. See the TXCO Web site at www.txco.com for a reconciliation of non-GAAP financial measures.

Management's Perspective

          "Commodity prices and sales volumes continue to rise, giving us strong cash flows and Ebitda," said President and CEO James E. Sigmon. "However, our hedges, coupled with these record commodity prices, impacted our earnings negatively. Successful efforts accounting requires us to put certain dryhole costs we incur behind us immediately as we move ahead. I expect our trend of higher production and reserves to continue as we move ahead with the ambitious drilling program we have under way."

About The Exploration Company

          The Exploration Company is an independent oil and gas enterprise with interests primarily in the Maverick Basin of Southwest Texas. The Company 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. Its business strategy is to build shareholder value by acquiring undeveloped mineral interests and internally develop a multi-year drilling inventory through the use of advanced technologies, such as 3-D seismic and horizontal drilling. The Company accounts for its oil and gas operations under the successful efforts method of accounting and trades its common stock on the Nasdaq Stock 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 oil and gas prices, capital expenditures, production levels, drilling plans, including the timing, number and cost of wells to be drilled, 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 reserve s, 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. 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 Dec. 31, 2004, and its Form 10-Q for the quarter ended March 31, 2005. 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.

(Financial Information and Selected Operational Tables Follow)

THE EXPLORATION COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
	June 30, 2005	December 31, 2004
Assets
Current Assets:
Cash and equivalents	$1,883,321	$3,118,328
Accounts receivable, net	8,922,955	8,985,373
Prepaid expenses and other	1,708,006	800,045
Accrued derivative asset - current	-	133,971
Total Current Assets	12,514,282	13,037,717
Property and Equipment,net - successful efforts    method of accounting for oil and gas properties	105,574,109	94,836,476
Other Assets:
Deferred tax asset	5,246,876	5,232,718
Other assets	1,220,656	1,130,413
Total Other Assets	6,467,532	6,363,131
Total Assets	$124,555,923	$114,237,324

THE EXPLORATION COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
	June 30, 2005			December 31, 2004
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable, trade		$11,107,254		$10,339,934
Other payables and accrued liabilities		7,811,822		5,449,553
Derivative settlements payable		94,350		49,185
Accrued derivative obligation - current		2,533,617		-
Undistributed revenue		1,224,783		1,062,000
Current portion of long-term debt		170,560		1,666,466
Total Current Liabilities		22,942,386		18,567,138
Long-term Liabilities:
Long-term debt, net of current portion		24,399,237		17,099,237
Accrued derivative obligation - long-term		1,481,607		-
Redeemable preferred stock, Series B       (redemption value - $16 million)		11,441,812		10,991,308
Accrued dividends - preferred stock		297,726		217,728
Asset retirement obligation		1,738,220		1,679,600
Total Long-Term Liabilities		39,358,602		29,987,873
Stockholders' Equity:
Preferred stock, authorized 10,000,000 shares       Series A, -0- shares issued and outstanding;       Series B, 16,000 shares issued and outstanding		-		-
Common stock, par value $.01 per share; authorized       50,000,000 shares; issued 28,465,363 and 28,110,363 shares,       outstanding 28,365,563 and 28,010,563 shares		284,653		281,103
Additional paid-in capital		85,302,805		84,010,730
Accumulated deficit		(22,684,251	)	(18,363,513	)
Less treasury stock, at cost, 99,800 shares		(246,007	)	(246,007	)
Accumulated other comprehensive loss		(402,265	)	-
Total Stockholders' Equity		62,254,935		65,682,313
Total Liabilities and Stockholders' Equity		$124,555,923		$114,237,324

THE EXPLORATION COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
	Three Months Ended			Three Months Ended
	June 30, 2005			June 30, 2004
Revenues
Oil and gas sales		$8,877,301			$6,956,443
Gas gathering operations		6,579,597			7,666,582
Other operating income		14,410			1,484
Total Revenues		15,471,308			14,624,509
Costs and Expenses
Lease operations		1,722,839			1,428,241
Production taxes		529,301			455,660
Exploration expenses		838,841			575,385
Impairment and abandonments		590,432			516,900
Gas gathering operations		6,249,948			7,040,536
Depreciation, depletion and amortization		3,627,724			2,437,143
General and administrative		1,344,256			1,027,040
Total Costs and Expenses		14,903,341			13,480,905
Income from Operations		567,967			1,143,604
Other Income (Expense)
Derivative settlements loss		(284,634	)		-
Derivative mark to market loss		(336,546	)		-
Interest income		12,011			15,487
Interest expense		(932,306	)		(727,910	)
Loan fee amortization		(19,960	)		(53,695	)
Total Other Income (Expense)		(1,561,435	)		(766,118	)
Income before income taxes and minority interest		(993,468	)		377,486
Minority interest in income of subsidiaries		-			19,823
Income before income taxes		(993,468	)		397,309
Income tax expense		(24,999	)		(25,000	)
Net (Loss) Income		$(1,018,467	)		$372,309
(Loss) Earnings Per Share
Basic (loss) earnings per share		$(0.04	)		$0.02
Diluted (loss) earnings per share		$(0.04	)		$0.01

THE EXPLORATION COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
	Six Months Ended			Six Months Ended
	June 30, 2005			June 30, 2004
Revenues
Oil and gas sales		$16,560,764			$13,111,625
Gas gathering operations		13,506,991			12,875,475
Other operating income		20,536			4,806
Total Revenues		30,088,291			25,991,906
Costs and Expenses
Lease operations		3,408,345			2,675,627
Production taxes		990,738			842,240
Exploration expenses		1,351,031			749,782
Impairment and abandonments		1,154,826			1,033,800
Gas gathering operations		12,821,906			11,934,670
Depreciation, depletion and amortization		6,108,920			4,772,440
General and administrative		2,523,470			2,032,661
Total Costs and Expenses		28,359,236			24,041,220
Income from Operations		1,729,055			1,950,686
Other Income (Expense)
Derivative settlements loss		(453,115	)		-
Derivative mark to market loss		(3,732,773	)		-
Interest income		23,968			19,411
Interest expense		(1,801,818	)		(1,457,903	)
Loan fee amortization		(36,058	)		(58,951	)
Total Other Income (Expense)		(5,999,796	)		(1,497,443	)
Income before income taxes and minority interest		(4,270,741	)		453,243
Minority interest in income of subsidiaries		-			37,983
Income before income taxes		(4,270,741	)		491,226
Income tax expense		(49,998	)		(50,000	)
Net (Loss) Income		$(4,320,739	)		$441,226
(Loss) Earnings Per Share
Basic (loss) earnings per share		$(0.15	)		$0.02
Diluted (loss) earnings per share		$(0.15	)		$0.02

THE EXPLORATION COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
	Six Months Ended			Six Months Ended
	June 30, 2005			June 30, 2004
Operating Activities
Net (loss) income		$(4,320,739	)	$     441,226
Adjustments to reconcile net (loss) income to    net cash provided by operating activities:
Depreciation, depletion and amortization		6,108,920		4,772,440
Impairment and abandonments		1,154,826		1,033,800
Minority interest in income of subsidiaries		-		(37,983	)
Non-cash derivative mark to market loss		3,732,773		-
Non-cash interest expense and accretion of liability        - redeemable preferred stock		530,502		535,238
Changes in operating assets and liabilities:
Receivables		62,417		(5,263,582	)
Prepaid expenses and other		(998,203	)	(766,407	)
Accounts payable and accrued expenses		3,337,538		4,512,923
Net cash provided by operating activities		9,608,034		5,227,655
Investing Activities
Development and purchases of oil and gas properties		(17,924,293	)	(13,026,412	)
Purchase of other equipment		(18,467	)	(150,618	)
Changes in minority interests		-		59,398
Net cash used by investing activities		(17,942,760	)	(13,117,632	)
Financing Activities
Proceeds from issuance of common stock, net of expenses		1,295,625		18,452,125
Proceeds from long-term debt obligations		7,300,000		-
Payments on long-term debt obligations		-		(7,900,763	)
Payments on installment obligations		(1,618,369	)	(1,606,541	)
Proceeds from installment obligations		122,463		116,739
Net cash provided by financing activities		7,099,719		9,061,560
Change in Cash and Equivalents		(1,235,007	)	1,171,583
Cash and equivalents at beginning of period		3,118,328		6,180,560
Cash and Equivalents at End of Period		$1,883,321		$7,352,143

THE EXPLORATION COMPANY SELECTED OPERATING DATA
	Three Months Ended				Six Months Ended
	June 30, 2005		June 30, 2004		June 30, 2005		June 30, 2004
Net cash provided in operating activities	$	7,147,825	$	1,395,322	$	9,608,034	$	5,227,655
Ebitdax *		5,624,963		4,692,855		10,343,832		8,544,691
Ebitda *		4,786,122		4,117,470		8,992,801		7,794,909
Debt to asset ratio		31.7%		23.8%		31.7%		23.8%
Sales
Oil:
Sales, in barrels (BO)		80,711		65,696		155,553		147,149
Average sales price per barrel	$	49.79	$	34.70	$	47.86	$	33.20
Natural Gas:
Sales, in Mcf		710,029		782,926		1,403,500		1,421,576
Average sales price per Mcf	$	6.84	$	5.98	$	6.50	$	5.79
Equivalent Basis:
Production in BOE		199,049		196,084		389,470		384,078
Average sales price per BOE	$	44.60	$	35.48	$	42.52	$	34.14
Sales in Mcfe		1,194,295		1,176,502		2,336,818		2,304,470
Average sales price per Mcfe	$	7.43	$	5.91	$	7.09	$	5.69
Other Operating Data
Total lifting costs	$	2,252,140	$	1,883,902	$	4,399,083	$	3,517,867
Lifting costs per Mcfe	$	1.89	$	1.60	$	1.88	$	1.53
Sales volume - oil properties - barrels		72,588		60,689		140,762		136,460
Lifting costs-oil (Incl Prod & Sev Tax)	$	1,147,020	$	874,245	$	2,212,767	$	1,816,605
Lifting costs per Barrel	$	15.80	$	14.41	$	15.72	$	13.31
Sales volume - gas properties - Mcf		650,428		775,320		1,314,211		1,408,244
Lifting costs-gas (Incl Prod & Sev Tax)	$	1,105,120	$	1,009,657	$	2,186,316	$	1,701,536
Lifting costs per Mcf	$	1.70	$	1.30	$	1.66	$	1.21
Sales volume excluding CBM properties - Mcf		647,013		769,110		1,303,168		1,395,132
Lifting costs excluding CBM activities	$	1,043,313	$	912,058	$	2,015,354	$	1,490,084
Lifting costs per Mcf excluding CBM activities	$	1.61	$	1.19	$	1.55	$	1.07
Depletion cost per BOE	$	17.96	$	12.14	$	15.41	$	12.14
Depletion cost per Mcfe	$	2.99	$	2.02	$	2.57	$	2.02
* Please see TXCO's Web site atwww.txco.com for a reconciliation of these non-GAAP financial measures.