TXCO Resources Increases Fort Trinidad-Area Interest

TXCO Resources Inc. has increased its Fort Trinidad Field-area holdings in East Texas through a $19.6 million acquisition of acreage and reserves.

Through separate transactions with several private parties, the Company has increased its Fort Trinidad holdings to 36,498 gross acres, or 20,526 net acres. Prior to the acquisition, TXCO had interests in approximately 18,000 gross acres, or 8,000 net acres. The acquisition includes 8.1 bcfe of proved reserves at year end, purchased at an average cost of $2.06 per mcfe.

The Fort Trinidad Field, part of TXCO's 2007 acquisition of Output Exploration LLC, is located in portions of Houston, Madison and Leon counties and is prospective from multiple producing formations in the East Texas Basin. The Company's current drilling program targets Fort Trinidad's gas-charged Glen Rose shoals. Its first Glen Rose shoal well recently went on production while a second well currently is drilling. The Company plans to have a second rig working in the area by mid April.

"This acquisition adds to the potential TXCO has in East Texas," said Chairman and CEO James E. Sigmon. "Fort Trinidad is a good fit with our core, Maverick Basin area because it is prospective from similar formations that we know well the Glen Rose, Buda, Austin Chalk and Eagleford/Woodbine formations. Our expertise in underbalanced, horizontal drilling will assist us in developing these reservoirs and unlocking their value. Also, Fort Trinidad is prospective for the prolific down-dip Bossier play."


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