FORM 8-K



                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                 CURRENT REPORT

                Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934






                             The Exploration Company
             (Exact name of registrant as specified in its charter)


                    500 North Loop 1604 East, Suite 250, San
                        Antonio, Texas 78232 (Address of
                          principal executive offices)


                                 (210) 496-5300
              (Registrant's telephone number, including area code)



         Colorado                 0-9120                     84-0793089
(State or other jurisdiction  Commission File Number)    (IRS Employer
   of incorporation)                                     Identification No.)






Date of Report (Date of Earliest Event Required to be Reported): January 1, 1998






                                                     
Item 9.  Sale of Equity Securities Pursuant to Regulation S

The Exploration Company ("TXCO") had an outstanding convertible debenture in the
amount of $200,000,  dated January 27, 1997,  to Dr. Henri B. Meier,  a non-U.S.
person, as defined in Regulation S of the Securities Act of 1933, ("the Act") as
amended. Effective January 1, 1998, under terms of the debenture, TXCO exercised
its option to convert the entire  debenture plus accrued and unpaid  interest of
$11,080  to shares of TXCO's  common  stock at a  conversion  price of $5.00 per
share. Dr. Meier will receive 42,216 shares of the TXCO's common stock.

Additionally,  TXCO had an  outstanding  convertible  debenture in the amount of
$3,800,000  dated January 29, 1997, to  Pensionskasse  der F.  Hoffman-La  Roche
A.G., a non-U.S.  person,  as defined in Regulation S of the  Securities  Act of
1933, as amended.  Effective January 1, 1998, under terms of the debenture, TXCO
exercised  its option to convert the entire  debenture  plus  accrued and unpaid
interest of $210,510 to shares of TXCO's  common stock at a conversion  price of
$5.00 per share.  Pensionskasse der F. Hoffman-La Roche A.G will receive 802,102
shares of the TXCO's common stock.

The  cumulative  effect of the  transactions  reported in this 8-K is that as of
January 1,  1998,  TXCO has issued an  additional  844,318  shares of its common
stock thereby  increasing its issued and outstanding  shares total to 15,613,516
shares.  As both  recipients  of the new stock  issuance are  non-U.S.  parties,
within the meaning of the Act, all of the 844,318  shares were issued by TXCO in
reliance upon the exemption from registration provided by Regulation S under the
Securities Act of 1933, as amended. TXCO's unaudited balance sheet net equity is
anticipated  to increase by  approximately  $4,220,000.  With the  conversion of
these debentures, as of January 1, 1998, TXCO has no outstanding long-term debt.







                                                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 thereunto duly authorized.


                                                     THE EXPLORATION COMPANY
                                  (Registrant)


                                                             /s/ James E. Sigmon
                                                              James E. Sigmon
                                                              President



Date:  January 14, 1998