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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

JUNE 30, 1999
(DATE OF REPORT) (DATE OF EARLIEST EVENT REPORTED)

VENUS EXPLORATION, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION)

0-14334 13-3299127
(COMMISSION FILE NO.) (IRS EMPLOYER IDENTIFICATION NO.)

1250 N.E. LOOP 410
SUITE 1000
SAN ANTONIO, TEXAS 78209
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (210) 930-4900

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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.

On June 30, 1999, EXUS Energy, LLC, a Delaware limited liability
company ("EXUS"), owned 50% by EXCO Resources, Inc. ("EXCO") and 50% by Venus
Exploration, Inc. ("Venus"), completed the acquisition from Apache Corporation
of certain oil and natural gas properties located in Jackson Parish, Louisiana
(the "Jackson Parish Properties"). Exco is a publicly-held oil and gas company
based in Dallas, Texas. The Jackson Parish Properties include 17 gross (14.25
net) producing wells. EXCO is the named operator of the Jackson Parish
Properties and assumed operations of all 17 wells acquired in the transaction.
The Jackson Parish Properties include 6,411 gross (5,672 net) developed acres
and 1,532 gross (1,148 net) undeveloped acres. As of April 1, 1999, the Jackson
Parish Properties were estimated to contain 2,815 barrels of oil ("Bbls") and
66.5 billion cubic feet ("Bcf") of gas. The purchase price, before closing
adjustments, was approximately $28.5 million, and after adjustments (the
adjustments principally reflect production since March 1, 1999, the effective
date of the acquisition), was $27.6 million cash. The purchase price was funded
with $14 million drawn under a new credit facility established by EXUS and $14
million of EXUS equity capital. The purchase price was determined based upon
arms-length negotiations between Apache Corporation and Venus taking into
account reserve estimates and other items customarily considered in acquisitions
of this type.

Purchase and Sale Agreement. The Jackson Parish Properties were
acquired pursuant to the terms of a Purchase and Sale Agreement (the "Purchase
Agreement"), dated as of May 13, 1999, entered into between Apache Corporation
and Venus. At closing of the acquisition, EXUS was assigned Venus' rights and
obligations under the Purchase Agreement. The Purchase Agreement includes
representations, warranties, covenants and closing conditions customary for
transactions of this type.

Limited Liability Company Agreement. EXCO and Venus have entered into a
Limited Liability Company Agreement (the "LLC Agreement"). EXCO and Venus each
own a 50% equity interest in EXUS and thereby entitled to a 50% share of the
profits and losses of EXUS, subject to special allocations in certain events.
EXUS' principal business purpose is initially the management and development of
the Jackson Parish Properties. EXCO and Venus have established an area of mutual
interest in respect of the Jackson Parish Properties which governs any
additional acquisitions of properties by either partner within the area. In
addition, the partners may also undertake other acquisitions of oil and gas
properties through EXUS.

EXUS shall be managed by a management committee comprised of two
persons designated by EXCO (initially, EXCO's representatives are Douglas H.
Miller, its Chairman and Chief Executive Officer, and T.W. Eubank, its
President) and two persons designated by Venus (initially, Venus'
representatives are Eugene L. Ames, Jr., its Chairman and Chief Executive
Officer, and John Y. Ames, its President and Chief Operating Officer). EXUS'
officers are: Eugene L. Ames, Jr., Chairman of the Management Committee; T.W.
Eubank, President, J. Douglas Ramsey, Vice President and Treasurer; and Richard
E. Miller, Secretary.

Most actions of the members require majority consent. Certain actions
require consent of members holding 66 2/3% of the membership interests
including: merger, sale of all of EXUS' assets, liquidation, conversion of the
legal form of the entity to another form or amending the LLC Agreement to change
any minority membership interest protection.

EXCO and Venus initially capitalized EXUS with $14 million of equity
capital, all of which was applied to fund the purchase of the Jackson Parish
Properties. EXUS also arranged a credit facility (discussed in greater detail
below) through NationsBank, N.A. to fund a portion of the Jackson Parish

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Properties acquisition, to fund additional development drilling of the
properties and to fund additional acquisitions.

The members have identified to date certain additional development
drilling opportunities in the Jackson Parish Properties and have initially
budgeted $5.1 million (subject to lender approval) to fund those activities. The
LLC Agreement permits the Management Committee to call for additional capital
contributions from the members to fund the capital needs of EXUS. Furthermore,
either member may propose a Subsequent Operation (as that term is defined in the
joint operating agreement between EXUS and EXCO governing operation of the
Jackson Parish Properties) on the Jackson Parish Properties. A "Subsequent
Operation" would encompass significant drilling activities such as a new well,
recompletion of an existing well or workover project. In the event EXCO and
Venus are unable to agree to fund the project through EXUS, the proposing member
may elect to proceed with the Subsequent Operation in EXUS's name, but the
Subsequent Operation will be funded solely by the proposing member. In that
event, all expenses, losses, gain or income from the project shall be specially
allocated solely to the proposing member until the proposing member has recouped
a sum equal to 300% of the additional capital contribution that would have been
funded by the non-proposing member had it participated in the project.
Thereafter, all losses, expenses, gain or income shall be allocated to the
members pro rata according to their equity interest in EXUS.

The LLC Agreement includes other customary terms including terms
governing transfers of membership interests, voting, meetings and tax matters.

In conjunction with the LLC Agreement, Venus and EXCO have entered into
an Agreement Among Members governing transfer of the membership interests
(including a right of first refusal) and buy/sell rights in the event of a
deadlock between EXCO and Venus on a matter that requires a super-majority vote
of the members under the LLC Agreement.

Convertible Note. Of the initial $14 million of EXUS equity capital, $7
million was provided by EXCO from its cash on hand, and $7 million was provided
by Venus from borrowed funds. On June 30, 1999, Venus borrowed $7 million from
EXCO under the terms of an $8 million Convertible Promissory Note (the "Note").
The Note provides for borrowings up to $8 million, subject to restrictions on
the use of proceeds. As stated above, Venus drew $7 million under this Note to
fund Venus' capital contribution to EXUS. The Note provides for additional draws
beginning after January 1, 2000 not to exceed $1 million solely to fund
additional capital contributions to EXUS and/or to fund the expenses of one
equity issuance. Venus is not permitted to draw any of the $1 million until it
has obtained the stockholder approval described below. All borrowings under the
Note are secured by a first priority lien providing a security interest in the
membership interest of Venus in EXUS, and the distribution and income rights of
Venus in EXUS and/or to fund the expenses of one equity issuance. The Note
provides that advances will bear interest, which can be paid in cash or, at
Venus' election, Venus common stock, at a rate of 10% from June 30, 1999 through
June 30, 2000, with interest increasing 1% per year through June 30, 2004.
Advances will bear interest at a rate of 15% thereafter in the event of default.
If interest is paid in Venus common stock, the number of shares to be issued
shall be determined by dividing the interest payment due by the average market
price of one share of Venus common stock for the twenty trading days immediately
preceding the interest payment date. Interest is payable semi-annually
commencing on January 1, 2000. The Note matures on July 1, 2004 at which time
all of the unpaid principal is due and payable.

Beginning on July 1, 2000 and continuing until the payment in full of
the Note, EXCO, at its option, may convert all or any portion of the outstanding
principal balance and accrued interest into shares of Venus common stock for
$1.50 per share, subject to adjustment in certain events. On or before December
15, 1999, Venus is required to obtain approval of its stockholders (as required
by the rules of the

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Nasdaq SmallCap Market) of the issuance of the Venus common stock which may be
issued upon the conversion of principal or accrued interest under the terms of
the Note. In the event Venus is unable to obtain such stockholder approval,
Venus would be required to prepay $3 million of the Note plus accrued interest
thereon. (Venus is currently authorized to issue shares of its common stock upon
conversion of up to $4 million of the principal of the Note without such
stockholder approval; accordingly the $3 million mandatory prepayment equates to
the principal amount EXCO would not be able to convert to Venus common stock if
stockholder approval was not obtained.) Alternatively, Venus may elect to
transfer membership interests in EXUS held by Venus equal to 21.43% of the
aggregate outstanding interests of EXUS (this approximates 3/7 of Venus' equity
interest in EXUS) in exchange for a cancellation of $3 million of principal owed
under the Note.

The Note also requires a mandatory prepayment of principal equal to 50%
of the net proceeds of each equity issuance by Venus on or after June 30, 1999
(excluding the first $5 million of aggregate net proceeds of all equity
issuances after June 30, 1999). Venus may also voluntarily prepay any or all of
the Note (subject to a prepayment penalty of 3.57% of the principal prepaid for
any prepayment occurring on or prior to July 1, 2000).

The Note contains other customary terms including certain
representations, affirmative covenants (such as conduct of Venus' business,
reports to EXCO, compliance with laws), negative covenants (including no
purchase or redemption of Venus' common stock and no sale, transfer, mortgage or
pledge of the collateral securing the Note), and events of default (including
failure to pay principal or interest as required, violation of covenants in the
Note, bankruptcy, change of control of Venus, or default under Venus' secured
credit facility). An event of default would occur if Venus is unable to obtain
stockholder approval.

The shares which may be issued under the terms of the Note are subject
to a Registration Rights Agreement dated June 30, 1999. The Registration Rights
Agreement requires Venus to register with the Securities and Exchange Commission
10,133,333 shares of Venus common stock that may be issuable to EXCO under the
Note for resale by EXCO from time to time. The 10,133,333 shares represents (i)
5,333,333 that would be issued if EXCO were to convert $8 million of principal
under the Note at $1.50 per share and (ii) 4,800,000 shares assuming Venus were
to elect to pay all interest accruing on $8 million principal of the Note at an
assumed market price of $1.00 per share. The Registration Rights Agreement
provides that a registration statement must be filed with the SEC by September
28, 1999 and effective on or prior to the 120th day following the first issuance
of any shares under the Note (which 120 day period may be extended to 210 days
if Venus has timely complied with its covenants under the Registration Rights
Agreement, but the registration statement is still under review by the
Securities and Exchange Commission). The Registration Rights Agreement contains
other customary terms and provisions including indemnification for certain
facilities under applicable securities laws. A breach of the agreement would
constitute an event of default under the Note.

EXUS Credit Facility. On June 30, 1999, EXUS entered into a credit
facility with NationsBank, N.A. as administrative agent and lender. The credit
facility provides for borrowings up to $50 million, subject to borrowing base
limitations. The bank has sole discretion to determine the borrowing base based
on its valuation of EXUS' reserves valued semi-annually.

The credit facility consists of a regular revolver, which on July 15,
1999, had a borrowing base of $19.5 million. At July 15, 1999, EXUS had
approximately $5.5 million available for borrowing under the credit facility. A
portion of the borrowing base is available for the issuance of letters of
credit. All

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borrowings under the credit facility are secured by a first lien mortgage
providing a security interest in substantially all assets owned by EXUS
including all mineral interests.

The credit facility provides that if the aggregate outstanding
indebtedness of EXUS is less than 75% of the borrowing base, then advances will
bear interest at 1.5% over LIBOR. If the borrowing base usage equals or exceeds
75%, then advances will bear interest at 1.75% over LIBOR.

Under the terms of the credit facility, EXUS must not permit its
consolidated current assets to its consolidated current liabilities to be less
than 1.0 to 1.0 at any time. Furthermore, EXUS must not incur or pay general and
administrative expenses in an aggregate amount exceeding $100,000 during the
period from June 30, 1999 through December 31, 1999, or $200,000 during any
fiscal year thereafter. On July 15, 1999, EXUS was in compliance with both the
current ratio covenant and the general and administrative expense covenant.

Commencing on September 25, 1999 and continuing each month thereafter
until maturity, EXUS shall make mandatory prepayments on the credit facility in
an amount equal to 50% of EXUS' Net Revenues (as defined in the credit
facility) for the immediately preceding calendar month. Each such payment shall
be applied first to accrued but unpaid interest and then to principal. However,
if a borrowing base deficiency were to exist after giving effect to a
redetermination, then EXUS would have to do one of the following:

o eliminate the borrowing base deficiency by making a single mandatory
prepayment of principal on the revolving loan in an amount equal to the
entire amount of the borrowing base deficiency on the first monthly
date following the date on which the borrowing base deficiency is
determined to exist;

o eliminate the deficiency by making six consecutive mandatory
prepayments of principal on the revolving loan each of which shall be
in the amount of one sixth (1/6th) of the amount of the borrowing base
deficiency commencing on the first monthly date following the date on
which the borrowing base deficiency is determined to exist and
continuing on each monthly date thereafter; or

o eliminate the borrowing base deficiency by submitting additional
mineral interests to the banks on the first monthly date following the
date on which the borrowing base deficiency is determined to exist for
evaluation as borrowing base properties which the banks, in their sole
discretion, determine have a value sufficient to increase the borrowing
base by at least the amount of the borrowing base deficiency.

The credit facility matures on June 30, 2002. The next borrowing base
redetermination is scheduled for January 1, 2000, and on or about each April 30
and October 31, thereafter. EXUS may seek additional borrowing capacity at that
time for its development drilling program. However, we and EXUS cannot assure
you that the current development program of EXUS will result in increased
collateral values or that these values will enable us to borrow the funds EXUS
needs to continue the program.

The credit facility contains a number of covenants affecting the
liquidity and capital resources of EXUS, including restrictions on the ability
to incur indebtedness at any time in an amount exceeding $25,000 or to pledge
assets outside of the credit facility, the maintenance of a current ratio,
limitations on general and administrative expenses, and restrictions on the
payment of dividends on the equity capital units of EXUS.

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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements.

As permitted by Form 8-K, the required historical financial
statements in respect of the Jackson Parish Properties will be
filed by amendment to this Form 8-K no later than September
13, 1999.

(b) Pro Forma Financial Information.

As permitted by Form 8-K, the required pro forma financial
information in respect of the Jackson Parish Properties will
be filed by amendment to this Form 8-K no later than September
13, 1999.

Number Document

10.1 Purchase and Sale Agreement between Apache
Corporation as seller, and Venus
Exploration, Inc., buyer, dated May 13,
1999.

10.2 Credit Agreement among EXUS Energy, LLC, as
borrower, NationsBank, N.A., as
administrative agent, and financial
institutions listed on Schedule I, dated
June 30, 1999.

10.3 Limited Liability Company Agreement of EXUS
Energy, LLC, dated June 30, 1999.

10.4 Convertible Promissory Note made by Venus
Exploration, Inc. in favor of EXCO
Resources, Inc., dated June 30, 1999.

10.5 Pledge Agreement made by Venus Exploration,
Inc. for the benefit of EXCO Resources,
Inc., dated June 30, 1999.

10.6 Registration Rights Agreement between EXCO
Resources, Inc. and Venus Exploration, Inc.,
dated June 30, 1999.

10.7 Agreement Among Members between EXCO
Resources, Inc. and Venus Exploration, Inc.,
dated June 30, 1999.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.

VENUS EXPLORATION, INC.

By: /s/ PATRICK A. GARCIA
-------------------------------------
Patrick A. Garcia,
Chief Financial Officer and Treasurer

Dated: July 15, 1999

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Index To Exhibits

Exhibit No. Description
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10.1 Purchase and Sale Agreement between Apache Corporation as seller, and
Venus Exploration, Inc., buyer, dated May 13, 1999.

10.2 Credit Agreement among EXUS Energy, LLC, as borrower, NationsBank,
N.A., as administrative agent, and financial institutions listed on
Schedule I, dated June 30, 1999.

10.3 Limited Liability Company Agreement of EXUS Energy, LLC, dated June 30,
1999.

10.4 Convertible Promissory Note made by Venus Exploration, Inc. in favor of
EXCO Resources, Inc., dated June 30, 1999.

10.5 Pledge Agreement made by Venus Exploration, Inc. for the benefit of
EXCO Resources, Inc., dated June 30, 1999.

10.6 Registration Rights Agreement between EXCO Resources, Inc. and Venus
Exploration, Inc., dated June 30, 1999.

10.7 Agreement Among Members between EXCO Resources, Inc. and Venus
Exploration, Inc., dated June 30, 1999.