Exhibit 99
TXCO Provides First Quarter 2003 Operations Update; Boosts Record
CAPEX -- 7 Rigs Drilling Ahead
SAN ANTONIO--(BUSINESS WIRE)--April 23, 2003--The Exploration
Company (Nasdaq:TXCO) today announced a 21% increase in its 2003
capital expenditure plan and provided an update on its first-quarter
drilling program in the Maverick Basin of South Texas.
"We have a record level of activity under way for 2003. Our
drilling success to date has led us to raise an already ambitious
CAPEX budget of $27.4 million to $33.1 million," said TXCO President
and CEO James E. Sigmon.
"We added a sixth drilling rig late in the first quarter. By the
end of March, our partner, Blue Star Oil & Gas, spudded the
long-awaited deep Jurassic well on our Paloma lease, raising the count
to seven rigs actively drilling for oil and gas on our Maverick Basin
lease block. This is the most activity we have seen on our lease block
and it comes at a time when commodity prices are particularly strong."
TXCO participated in 24 wells in the first quarter of 2003,
including three re-entries, despite a seasonal moratorium on drilling
operations on several leases during January. First-quarter drilling
activities resulted in 11 wells successfully completed as producers,
five wells in completion phase, five wells shut in pending further
evaluation, one well temporarily abandoned pending sidetrack
operations, while two wells remained drilling at the end of March.
By comparison, the Company participated in nine wells in the first
quarter of 2002. The record number of first-quarter wells targeted
multiple productive formations under TXCO's acreage block, including
the Glen Rose, San Miguel, Georgetown and Jurassic intervals. The $5.7
million CAPEX increase impacts several budget categories including
targeted drilling activities and additional leasehold acquisitions.
TXCO continues to target participation in a record 93 gross wells on
its Maverick Basin acreage this year. First-quarter drilling and
operating highlights follow.
Glen Rose Oil
TXCO and its operating partner, Saxet Energy Ltd., have drilled
two new wells and re-entered and sidetracked one well since year-end
2002. The Comanche No. 3-111 is the first of 13 planned horizontal
wells targeting the Glen Rose porosity interval engineered to optimize
oil production from numerous faults and fractures while minimizing
associated water production.
Completed in April, it currently is flowing approximately 1,300
gross barrels of oil per day (BOPD) with no water after being drilled
4,000 feet horizontally across the top of the targeted porosity zone.
TXCO and its partner believe developing the field with horizontal
wells will allow more oil, with a better water cut, to be produced
from the reservoir with fewer wells. This initial well appears to
verify this technique.
A second well, the Comanche No. 1-659, located the targeted
porosity interval but has been temporarily abandoned due to unstable
hole conditions. The well was shut in and is expected to be
sidetracked at a later date.
Saxet also re-entered and successfully sidetracked the Comanche
No. 2-44. This well had been shut in during 2002 after encountering
poorer-than-normal porosity in the original wellbore. The new
sidetrack well bore found good porosity within several hundred feet
and is currently flowing approximately 55 BOPD and six barrels of
water per day (BWPD). The well remains on production and under
engineering review to evaluate its current production profile prior to
its possible horizontal extension.
Gross production from the Comanche Halsell (6500) Field is now
currently averaging approximately 3,250 BOPD and 3,150 BWPD. As
previously announced, 2003's CAPEX includes 26 proposed,
Saxet-operated Glen Rose porosity wells consisting of 13 horizontal
development wells and 13 exploratory vertical wells. The $7.8 million
allocated for Comanche drilling remains the largest component of
TXCO's 2003 capital budget.
Horizontal Glen Rose Shoal
TXCO has successfully completed three new horizontal Glen Rose
shoal gas wells, two on the Chittim lease and one on the Paloma lease.
The Chittim wells produce at rates ranging from over 500,000 cubic
feet per day (Mcfd) to over 1.35 million cubic feet per day (MMcfd).
The Paloma well is producing at a rate of approximately 250 Mcfd.
Currently, 11 horizontal Glen Rose shoal gas wells are producing a
gross volume of approximately 7.9 MMcfd. TXCO is now drilling the
fourth of 17 Glen Rose shoal horizontal wells planned this year. The
2003 CAPEX budget includes $6 million for this project.
Georgetown Deviated Wells
TXCO engineers have recently employed directional drilling to
enter the Georgetown formation at deviated angles, cutting through
numerous, near-vertical faults. During the first quarter TXCO drilled
five new wells, re-entered two and participated in drilling one
outside-operated prospect, all primarily employing the deviated
technique.
Two of the wells appear to have much-improved hydrocarbon recovery
rates compared to similarly situated conventional wells. One well is
being completed, while the remaining five wells are shut in pending
further evaluation. Completions in the formation's faults can greatly
improve reservoir drainage.
Currently, six wells are producing a gross combined total of
approximately 350 BOPD, 605 Mcfd and 53 BWPD. Because these Georgetown
faults appear on most of TXCO's leases, TXCO believes the Georgetown
formation will ultimately add significant production and reserves. The
2003 CAPEX budget includes $6.9 million for drilling 25 Georgetown
wells.
San Miguel Waterflood
TXCO has spudded the first eight of 15 infill wells planned for
this year to prove the existence of bypassed reserves not presently
included in the Company's Pena Creek San Miguel reserve base. Of the
eight wells drilled during the quarter, four have been successfully
fracture stimulated, completed and are producing a total of
approximately 120 BOPD.
The four remaining wells are currently in completion or are
scheduled for fracture stimulation. Daily gross production rates from
the Pena Creek field increased from 265 BOPD at year-end 2002 to
approximately 385 BOPD with the completion of these wells. TXCO's 2003
CAPEX includes $4.0 million targeting new San Miguel production.
Deep Jurassic
As previously announced , Blue Star began drilling the Taylor No.
1-132 well at the end of March. The well is permitted to a depth of
18,500 feet, into the untested Jurassic formations of the basin under
TXCO's Paloma lease. Because all other interior basins around the Gulf
of Mexico have historically produced significant quantities of oil and
gas from Jurassic intervals, TXCO believes the Jurassic in the
Maverick Basin will also be productive.
Under its joint operating agreement with the Company, Blue Star
has directed TXCO to restrict the public release of further
information concerning the well and its ongoing progress until Blue
Star releases the data.
Burr Lease
TXCO is now actively seeking a 50% partner in advance of a 3-D
seismic shoot it plans for the 70,700-acre Burr Ranch lease acquired
during the first quarter. The Company feels the acreage has excellent
potential to establish production from the Glen Rose, Georgetown and
Jurassic intervals.
Looking Ahead
"We anticipate 2003 continuing with similar activity levels as the
first three months," added Sigmon. "Provided our cash flow and
borrowing base keep pace with our increased drilling program, this
year will set records for exploration and development activity as we
continue to aggressively and successfully drill our Maverick Basin
acreage."
TXCO Quarterly Production Volumes
TXCO's estimated ending first quarter 2003 net oil and gas
production volumes and historical volumes from the comparable prior
year period are presented below.
The Company exited the first quarter with daily net production
rates of 1,074 BOPD and 6.5 MMcfd of natural gas. By mid-April net
production increased to approximately 1,580 BOPD and 6.8 MMcfd as
additional new oil and gas wells have been placed on line.
% chg.
Q1 Q1 Q103/
2003 2002 Q102
- ------------------------------------------ --------- -------- -------
Natural Gas / MMcf 551 651 -15.4%
- ------------------------------------------ --------- -------- -------
Oil / Bbls 81,109 17,773 356.4%
- ------------------------------------------ --------- -------- -------
- ------------------------------------------ --------- -------- -------
Natural Gas Equivalents
MMcfe 1,038 758 37.0%
- ------------------------------------------ --------- -------- -------
Oil Equivalents
BOE 172,996 126,251 37.0%
- ------------------------------------------ --------- -------- -------
"TXCO expects new oil and gas well completions from its ongoing
2003 drilling program will result in overall gas and oil production
increases over comparable prior period production levels," Sigmon
added.
About The Exploration Company
The Exploration Company is an independent oil and gas enterprise
with interests primarily in the Maverick Basin in Southwest Texas. Its
long-term business strategy is to acquire 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(sm) under the
symbol "TXCO." For more information, visit the Company's Web site at
www.txco.com.
Forward-looking Statements
Statements in this press release which 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, but are not limited to, risks associated with drilling,
including timing, mechanical difficulties, production levels, geologic
formations encountered and financial interests earned. 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. 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, 2002.
This 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.
CONTACT: The Exploration Company, San Antonio
Roberto R. Thomae, 210/496-5300
bthomae@txco.com