Compass Petroleum Partnership

NEW, TXCO Resources Inc., San Antonio, (Nasdaq: TXCO) (fka The Exploration Co.) has retained Scotia Waterous to assist in exploring strategic alternatives for its San Miguel tar sand holdings in the Maverick Basin of South Texas. Most of TXCO's operations are focused on the Maverick Basin in Dimmit, Kinney, Maverick and Zavala counties in southwestern Texas. As of year-end 2006, TXCO held a 50% operated working interest in 36,000 joint acres in the San Miguel Basin with Pearl Exploration and Production Ltd. The companies drilled two pilot wells using cyclic steam injection during 2007. The San Miguel is projected to have 7- to 10 billion barrels of zero-degree API gravity tar/bitumen in place and perhaps another 100 million barrels of 10- to 14- degree API gravity heavy oil in separate traps. Contact Adrian Goodisman, 713-437- 5050.