8-K

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
Date of Report
(Date of earliest event reported)
November 4, 2004
THE EXPLORATION COMPANY OF DELAWARE, INC.
(Exact name of registrant as specified in its charter)
Delaware	0-9120		84-0793089
(State of	(Commission File		(IRS Employer
incorporation)	Number)		Identification No.)
500 North Loop 1604 East, Suite 250
San Antonio, Texas		78232
(Address of principal executive offices)		(Zip Code)
(210) 496-5300
(Registrant's telephone number,
including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the    registrant under any of the following provisions (see General Instruction A.2. below):
o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02:  Results of Operations and Financial Condition
The Company issues a press release on November 8, 2004, attached as Exhibit 99.1, reporting earnings for the three- and nine-month periods ended September 30, 2004.
The press release contained a discussion of Ebitdax, defined as earnings before income taxes, interest, depreciation, depletion, amortization, impairment, abandonment and exploration expense, and Ebitda, defined as Ebitdax less exploration expense. Ebitdax and Ebitda are "non-GAAP financial measures" as defined in Item 10 of Regulation S-K of the Securities Exchange Act of 1934, as amended. The Company discussed Ebitdax and Ebitda for the quarter and nine-month periods ended September 30, 2004 and 2003. The required disclosures were posted to the Company's Web site, www.txco.com, which was referenced in the press release, with reconciliation to both "Net Income" and "Net Cash Provided by Operating Activities."
Item 7.01:  Regulation FD Disclosure
The Company issues a press release on November 4, 2004, attached as Exhibit 99.2, which updates on operations in the Maverick Basin.
Item 9.01:  Financial Statements and Exhibits
	Exhibit Number	Description
	99.1	Press Release dated November 8, 2004, entitled "The Exploration Company Reports Earnings; Cash Flows, Revenues, Assets Set Records"
	99.2	Press Release dated November 4, 2004, entitled "The Exploration Company Maverick Basin Operations; Production Up 5.4% in Third Quarter From Prior-Year Period"
The information contained in this report under Item 8.01, including the exhibit, is intended to be furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall such information be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: November 9, 2004
THE EXPLORATION COMPANY OF DELAWARE, INC.
			/s/ P. Mark Stark
			P. Mark Stark
			Chief Financial Officer
			(Principal Accounting and Financial Officer)

EX-99

			Exhibit 99.1
For Immediate Release		Contact Information
Monday, November 8, 2004		Investors: Roberto R. Thomae
		(210) 496-5300 ext. 214, bthomae@txco.com
		Media: Paul Hart
		(210) 496-5300 ext. 264, pdhart@txco.com
NEWS RELEASE
The Exploration Company Reports Earnings; Cash Flows, Revenues, Assets Set Records
SAN ANTONIO -- Nov. 8, 2004 - The Exploration Company (Nasdaq:TXCO) today reported improved financial results for the third quarter and first nine months of 2004.
TXCO's net income in the third quarter was $599,820, substantially above the $58,466 reported by the Company for the third quarter of 2003. On a per-share basis, earnings rose to $0.021 from a fractional $0.003 in the prior-year period. Adjusted for a one-time, non-cash compensation charge of $237,333 for changes on a stock option and warrant, earnings per share on a pro forma basis would have been $0.029 per share for the quarter. All per-share amounts are on a fully diluted basis. Income from operations was $1.3 million, more than triple the $437,465 reported in the third quarter of 2003. Total quarterly revenues rose to a record $15.3 million, 63 percent higher than the $9.4 million reported for the year-earlier quarter. At Sept. 30, the Company's assets were a record $106 million, up 26 percent from $84.2 million at Sept. 30, 2003.
For the first nine months of 2004, TXCO's net income was $1.0 million, a 31 percent increase from $792,589 recorded in the same period of 2003. On a per-share basis year to date, earnings rose to $0.040 from $0.038 a year earlier. Adjusted for the same, one-time charge that impacted the quarter, earnings per share on a pro forma basis would have been $0.049 per share. The Company's revenues were a record $41.3 million, a 46 percent increase from $28.4 million for January-September 2003. Income from operations for this year's first nine months was approximately $3.3 million, more than double the $1.5 million of the 2003 period.
Gas production, commodity prices and gas gathering revenues were higher than in the year-earlier periods, offset partially by lower oil production. Exploration, lease operating and gas gathering expenses were higher while impairment and abandonment expenses declined. The Company exited the third quarter of 2004 producing 17.4 million cubic feet of gas equivalent per day (MMcfed), which further increased 14.4 percent to 19.9 MMcfed at Oct. 31.
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          For the first nine months of this year, net cash provided by operating activities was a record $15.4 million, compared with $11.3 million for the comparable 2003 period. Ebitdax -- earnings before income taxes, interest, depreciation, depletion, amortization, impairment, abandonment and exploration expense
- -- was $13.7 million in the nine-month period this year, a 24 percent increase from $11.1 million a year earlier. Ebitda -- Ebitdax less exploration expense -- rose 25 percent to $12.3 million from $9.8 million in January-September 2003. See the Company's Web site at www.txco.com for a reconciliation of non-GAAP financial measures.

Management's Perspective

          "We had an excellent third quarter," said P. Mark Stark, vice president, treasurer and CFO. "We are particularly encouraged by these strong financial results in light of the new capital structure put in place just over a year ago during the third quarter of 2003.

          "With our comparatively low debt, efficient cost structure and the upside potential in the ratio swap hedging agreement we recently put in place, TXCO should be able to take full financial advantage of our growing production and reserves," Stark added. "Further affirming our production and reserve growth was the significant increase in the borrowing base of the Company's senior credit facility. Coupled with the hedges put in place in early October, our borrowing base has now risen to $20.75 million from $12.3 million. We were hopeful to get this increase finalized prior to the end of the third quarter but it took longer than we anticipated. This will certainly make our balance sheet look better going forward."

About The Exploration Company

          The Exploration Company is an independent oil and gas enterprise with interests primarily in the Maverick Basin of Southwest Texas. Headquartered in San Antonio, TXCO is celebrating its 25^th anniversary. The Company has a consistent record of long-term growth in its proved oil and gas reserves, leasehold acreage position, production and cash flow through its established exploration and development programs. Its business strategy is to build shareholder value by acquiring 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 under the symbol "TXCO."

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 those relating to budget plans, interest rates, capital expenditures, ongoing access to additional capital, production levels, drilling plans, equipment availability, including the timing, number, type of and cost of wells to be drilled, completed, re-entered, placed on production, planned projects and expected responses, establishment and evaluation of reserves, continuing overall success and the future exercise of seismic or lease options. 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, 2003, and its Form 10-Q for the quarter and year-to-date period ended June 30, 2004. These and all previously filed documents are on file at the Securities and Exchange Commission and can be viewed on TXCO's website at www.txco.com. Copies are available without charge upon request from the Company.

(Financial Information and Selected Operational Tables Follow)

The following tables should be read in conjunction with the Company's latest audited consolidated financial statements and notes thereto, as reported in its Form 10-K for the year ended Dec. 31, 2003.
THE EXPLORATION COMPANY
CONDENSEDCONSOLIDATED BALANCE SHEETS
(UNAUDITED)
	September 30, 2004	December 31, 2003
Assets
Current Assets
Cash and equivalents	$    4,841,420	$  6,180,560
Accounts receivable, net	6,733,357	4,837,965
Prepaid expenses	1,518,055	718,853
Total Current Assets	13,092,832	11,737,378
Property and Equipment, net - successful efforts    method of accounting for oil and gas properties	86,559,878	66,155,827
Other Assets
Deferred tax asset	5,232,718	5,232,718
Other assets	1,102,242	1,080,290
Total Other Assets	6,334,960	6,313,008
	$105,987,670	$84,206,213

THE EXPLORATION COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
	September 30, 2004		December 31, 2003
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable, trade	$  13,237,844		$  8,186,705
Other payables and accrued liabilities	4,903,512		3,709,016
Undistributed revenue	1,298,208		416,399
Current portion of long-term debt	1,604,340		1,752,286
Total Current Liabilities	21,043,904		14,064,406
Long-term Liabilities
Long-term debt, net of current portion	8,561,276		15,425,598
Redeemable preferred stock, Series B       (redemption value - $16 million)	10,766,056		10,135,335
Accrued dividends - preferred stock	177,729		57,732
Asset retirement obligation	1,648,600		1,537,600
Total Long-Term Liabilities	21,153,661		27,156,265
Minority Interest in Consolidated Subsidiaries	-		193,441
Stockholders' Equity
Preferred stock, Series A; authorized 10,000,000 shares       issued and outstanding -0- shares	- -		- -
Common stock, par value $.01 per share; authorized       50,000,000 shares; issued 28,073,863 and 22,242,849 shares,       outstanding 27,974,063 and 22,143,049 shares	280,738		222,428
Additional paid-in capital	83,874,670		63,976,021
Accumulated deficit	(20,119,296	)	(21,160,341	)
Less treasury stock, at cost, 99,800 shares	(246,007	)	(246,007	)
Total Stockholders' Equity	63,790,105		42,792,101
Total Liabilities and Stockholders' Equity	$105,987,670		$84,206,213

THE EXPLORATION COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
	Three Months Ended				Three Months   Ended
		September 30, 2004			September 30, 2003
Revenues
Oil and gas sales			$  7,846,365		$6,027,088
Gas gathering operations			7,464,545		3,364,162
Other operating income			6,120		2,631
Total Revenues			15,317,030		9,393,881
Costs and Expenses
Lease operations			1,242,615		1,158,760
Production taxes			446,183		348,225
Exploration expenses			696,430		292,928
Impairment and abandonments			579,968		641,725
Gas gathering operations			7,030,025		3,309,515
Depreciation, depletion and amortization			2,562,483		2,214,530
General and administrative			1,429,527		990,733
Total Costs and Expenses			13,987,231		8,956,416
Income from Operations			1,329,799		437,465
Other Income (Expense)
Interest income			8,313		10,754
Interest expense			(679,010	)	(403,296	)
Loan fee amortization			(9,486	)	(4,401	)
Total Other Income (Expense)			(680,183	)	(396,943	)
Income before income taxes and minority interest			649,616		40,522
Minority interest in income of subsidiaries			(3,094	)	17,944
Income before income taxes			646,522		58,466
Income tax expense			(46,702	)	-
Net Income			$     599,820		$     58,466
Earnings Per Share
Basic earnings per share			$0.022		$0.003
Diluted earnings per share			$0.021		$0.003

THE EXPLORATION COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
	Nine Months Ended			Nine Months    Ended
	September 30, 2004			September 30, 2003
Revenues
Oil and gas sales		$20,957,990			$18,484,022
Gas gathering operations		20,340,020			9,863,948
Other operating income		10,926			2,553
Total Revenues		41,308,936			28,350,523
Costs and Expenses
Lease operations		3,918,242			3,211,075
Production taxes		1,288,423			1,151,498
Exploration expenses		1,446,212			1,294,529
Impairment and abandonments		1,613,768			1,517,875
Gas gathering operations		18,964,695			10,324,076
Depreciation, depletion and amortization		7,334,923			6,708,998
General and administrative		3,462,188			2,621,636
Total Costs and Expenses		38,028,451			26,829,687
Income from Operations		3,280,485			1,520,836
Other Income (Expense)
Interest income		27,724			21,314
Interest expense		(2,136,913	)		(666,576	)
Loan fee amortization		(68,437	)		(13,203	)
Total Other Income (Expense)		(2,177,626	)		(658,465	)
Income before income taxes, minority interest and    cumulative effect of change in accounting principle		1,102,859			862,371
Minority interest in income of subsidiaries		34,889			54,218
Income before income taxes and cumulative effect of change    in accounting principle		1,137,748			916,589
Income tax expense		(96,702	)		(50,000	)
Cumulative effect of change in accounting principle, net of tax		-			(74,000	)
Net Income		$  1,041,046			$    792,589
Earnings Per Share
Basic earnings before cumulative effect of change          in accounting principle		$0.041			$0.043
Cumulative effect of change in accounting principle		-			(0.004	)
Basic earnings per share		$0.041			$0.039
Diluted earnings before cumulative effect of change          in accounting principle		$0.040			$0.041
Cumulative effect of change in accounting principle		-			(0.003	)
Diluted earnings per share		$0.040			$0.038

THE EXPLORATION COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
	Nine Months Ended			Nine Months Ended
	September 30, 2004			September 30, 2003
Operating Activities
Net income		$1,041,046			$    792,589
Adjustments to reconcile net income to    net cash provided by operating activities:
Depreciation, depletion and amortization		7,334,923			6,708,998
Impairment and abandonments		1,613,768			1,517,875
Minority interest in income of subsidiaries		(34,889	)		(54,218	)
Cumulative effect of change in accounting principle		-			74,000
Non-cash compensation expense on stock options and warrants		237,333			-
Non-cash interest expense and accretion of liability        - redeemable preferred stock		750,722			255,594
Net cash provided by operating activities,                before changes in operating assets and liabilities		10,942,903			9,294,838
Changes in operating assets and liabilities:
Receivables		(1,895,392	)		(1,498,444	)
Prepaid expenses and other		(799,202	)		(507,187	)
Accounts payable and accrued expenses		7,127,440			3,966,382
Net cash provided by operating activities		15,375,749			11,255,589
Investing Activities
Development and purchases of oil and gas properties		(27,807,179	)		(27,781,230	)
Purchase of other equipment		(220,890	)		(354,122	)
Net changes in minority interests		(158,552	)		77,865
Net cash used by investing activities		(28,186,621	)		(28,057,487	)
Financing Activities
Issuance of redeemable preferred stock, net of offering costs		-			9,170,632
Proceeds from issuance of common stock, net of expenses		18,484,000			5,819,679
Proceeds from long-term debt obligations		116,739			5,997,078
Payments on long-term debt obligations		(7,129,007	)		(1,063,280	)
Net cash provided by financing activities		11,471,732			19,924,109
Change in Cash and Equivalents		(1,339,140	)		3,122,211
Cash and equivalents at beginning of period		6,180,560			2,333,688
Cash and Equivalents at End of Period		$4,841,420			$ 5,455,899

THE EXPLORATION COMPANY SELECTED OPERATING DATA
	Three Months Ended					Nine Months Ended
	Sept. 30, 2004		Sept. 30, 2003			Sept. 30, 2004		Sept. 30, 2003
Net cash provided in operating activities	$	10,148,094	$	(50,574	)	$	15,375,749	$	11,255,589
Ebitdax *		5,165,586		3,604,592			13,710,277		11,096,456
Ebitda *		4,469,156		3,311,664			12,264,065		9,801,927
Debt to asset ratio		24.7%		35.2%			24.7%		35.2%
Production
Oil:
Production, in barrels		81,602		125,778			228,751		347,951
Average sales price per barrel	$	40.61	$	27.83		$	35.84	$	28.18
Natural Gas:
Production, in Mcf		806,895		475,331			2,228,471		1,522,452
Average sales price per Mcf	$	5.62	$	5.32		$	5.73	$	5.70
Equivalent Basis:
Production in Boe		216,085		205,000			600,163		601,693
Average sales price per Boe	$	36.31	$	29.40		$	34.92	$	30.72
Production in Mcfe		1,296,507		1,229,999			3,600,977		3,610,158
Average sales price per Mcfe	$	6.05	$	4.90		$	5.82	$	5.12
Other Operating Data
Total lifting costs	$	1,688,798	$	1,506,985		$	5,206,665	$	4,362,573
Lifting costs per Mcfe	$	1.30	$	1.23		$	1.45	$	1.21
Production volume - oil properties - barrels		74,829		124,969			211,289		340,138
Lifting costs-oil (Incl Prod & Sev Tax)	$	798,847	$	892,006		$	2,615,178	$	2,544,460
Lifting costs per Barrel	$	10.68	$	7.14		$	12.38	$	7.48
Production volume - gas properties - Mcf		793,433		473,287			2,201,677		1,515,055
Lifting costs-gas (Incl Prod & Sev Tax)	$	889,951	$	582,115		$	2,591,487	$	1,818,114
Lifting costs per Mcf	$	1.12	$	1.23		$	1.18	$	1.20
Production volume excluding CBM properties - Mcf		788,093		464,948			2,183,225		1,490,922
Lifting costs excluding CBM activities	$	742,427	$	430,412		$	2,232,511	$	1,455,297
Lifting costs per Mcf excluding CBM activities	$	0.94	$	0.93		$	1.02	$	0.98
Depletion cost per Boe	$	11.58	$	10.54		$	11.94	$	10.90
Depletion cost per Mcfe	$	1.93	$	1.76		$	1.99	$	1.82
* Please see TXCO's Web site at www.txco.com for a reconciliation of these non-GAAP financial measures.

EX-99

			Exhibit 99.2
For Immediate Release		Contact Information
Thursday, November 4, 2004		Investors: Roberto R. Thomae
		(210) 496-5300 ext. 214, bthomae@txco.com
		Media: Paul Hart
		(210) 496-5300 ext. 264, pdhart@txco.com
NEWS RELEASE
The Exploration Company Updates Maverick Basin Operations; Production Up 5.4% in Third Quarter From Prior-Year Period
SAN ANTONIO -- November 4, 2004 --The Exploration Company (Nasdaq:TXCO) today provided an operations update on its 554,000-acre lease block in the Maverick Basin of Southwest Texas.
TXCO's estimated, third-quarter net production rose to 1.297 billion cubic feet equivalent (Bcfe), up 5.4% from 1.23 Bcfe in the prior-year quarter. Gas output increased 69.8% from third-quarter 2003, more than offsetting an oil production decline of 35.1%. For the first nine months of 2004, cumulative net production was 3.6 Bcfe, essentially equivalent to production in the prior-year period. Increased gas output offset lower oil production. Quarterly and year-to-date production was negatively impacted by severe weather, a key operating partner's drilling curtailment and limited rig availability.

TXCO Cumulative Production Volumes
	3Q 2004	3Q 2003	%Change	9 Mos. 2004	9 Mos. 2003	% Change
Natural gas/MMcf	807	475	+69.8%	2,228	1,522	+46.4%
Oil/Bbls	81,602	125,778	-35.1%	228,751	347,951	-34.3%
Natural Gas Equivalent/MMcfe	1,297	1,230	+5.4%	3,601	3,610	-0.3%
Barrels Oil Equivalent/BOE	216,085	205,000	+5.4%	600,163	601,693	-0.3%

        The Company exited third-quarter 2004 producing 1,296 barrels of oil per day (BOPD) and 9.6 million cubic feet per day (MMcfd), a combined 17.4 million cubic feet equivalent per day (MMcfed), 25 percent above its Sept. 30, 2003, exit rate of 13.9 MMcfed and 15 percent over its June 30, 2004, exit rate of 15.1 MMcfed. At Oct. 31, TXCO's net daily production had increased an additional 14.4 percent since Sept. 30 to 19.9 MMcfed as wells completed in the third quarter were placed on production.

        Through late October, TXCO had spudded 56 new wells plus seven re-entries this year in the Maverick Basin -- its second-largest annual drilling program ever.

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        "We're pleased that TXCO's production is now right at the 20 million cubic feet equivalent per day we projected, the positive result of our drilling program in the third quarter," said President and CEO James E. Sigmon. "The quarter would have been even stronger had it not been for record rains and continuing pipeline hookup delays that kept us from realizing the full benefit of that drilling sooner. We continue to expect higher production levels and record reserves by year end." The annual hunting season drilling moratorium on certain leases begins this week and extends into January 2005.

        Current drilling and operating highlights include:

Glen Rose

        For 2004, TXCO has spudded 18 of 28 planned wells, plus three re-entries, targeting multiple Glen Rose plays. Net Glen Rose production at Oct. 31 stood at 629 BOPD and 6.0 MMcfd.

        In the Glen Rose porosity oil play, the Comanche 2-14H (50 percent working interest) went on production in late October, flowing approximately 500 BOPD and no water on a 10/64-inch choke with 705 pounds per square inch (psi) flowing tubing pressure. Meanwhile, the Comanche 2-39H (50% WI) continued to flow 370 BOPD in late October and has produced water-free oil since it began production in August. Both wells were drilled using a new technique in which the horizontal wellbore parallels fractures within the formation, minimizing water intrusion from a separate, lower zone.

        In the Glen Rose reef play, TXCO placed the Burr C 1-56 (100% WI) on production in late October flowing 1.2 MMcfd. Weather and pipeline construction delays postponed the start of production since the well's completion in the third quarter. Meanwhile, three wells originally targeting Glen Rose reefs, which proved wet, have been successfully completed as horizontal Georgetown wells.

Georgetown

        For 2004, TXCO has spudded 23 of 28 planned new Georgetown wells in addition to the three Georgetown completions originally targeting Glen Rose reefs. Net Georgetown production at Oct. 31 stood at 5.1 MMcfd and 254 BOPD.

        Fifteen Georgetown wells were drilled on the southern portion of TXCO's acreage block in 2004 year to date, including five spud in the third quarter. Of these, nine have been placed on production, five are in progress or awaiting completion while one had a mechanical failure. The Comanche W 1-2H (50% WI) flow tested from the Georgetown formation at rates as high as 1.4 MMcfd and 15 BOPD on a 12/64-inch choke with 1,840 psi flowing tubing pressure. The well went on production in late October at 1.0 MMcfd.

        On the northern portion of the Company's acreage block, eight Georgetown wells were drilled year to date, including one spud in the third quarter and three in October. Of these, one is producing, two await completion, one is drilling while four are shut in pending further evaluation.

        As to the three former Glen Rose reef wells, the Burr C 1-231.5H (100% WI) was placed on production in October flowing 860 thousand cubic feet per day (Mcfd). The Burr C 1-53H, (100% WI) went on production in early October pumping 157 BOPD. The Burr C 1-60 (100% WI) was placed on production in early November pumping 161 BOPD. In the Glen Rose shoal play, the Chittim 1-131H, (52% WI) went on production in late October at 825 Mcfd.

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Other Plays

        The Company has drilled 13 San Miguel oil wells this year, including 10 wells budgeted for its Pena Creek project. TXCO spudded three wells on its Comanche lease to test a new area in the San Miguel formation. Both wells were fracture stimulated and placed on pump as testing continues. Separately, the Farias 1-108 flow tested gas at rates as high as 237 Mcfd from the San Miguel following a workover.

        The Taylor 132-1 well (97.5% WI) is flowing to sales through a temporary connection from Pearsall perforations following fracture stimulation. The well has been producing 200 Mcfd while it continues to flow back fracture treatment fluids. Further testing continues.

        In the Olmos/coalbed methane (CBM) play (100% WI), mechanical difficulties delayed horizontal re-completion attempts in two CBM dewatering wells using multiple short-radius lateral (MSRL) technology. Design engineers are working to refine the MSRL tool design. The horizontal drilling technique could significantly increase dewatering volumes and associated CBM gas production. At the end of October, TXCO was producing 145 Mcfd from 36 CBM dewatering wells.

Earnings Announcement

        TXCO plans to release its third-quarter and year-to-date earnings statement on or before Nov. 8, 2004, and expects to release selected 2005 guidance in December.

About The Exploration Company

        The Exploration Company is an independent oil and gas enterprise with interests primarily in the Maverick Basin of Southwest Texas. Headquartered in San Antonio, TXCO is celebrating its 25^th anniversary. The Company has a consistent record of long-term growth in its proved oil and gas reserves, leasehold acreage position, production and cash flow through its established exploration and development programs. Its business strategy is to build shareholder value by acquiring 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 under the symbol "TXCO."

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 those relating

to oil and gas prices, capital expenditures, production levels, drilling plans, including the timing, number and cost of wells to be drilled, projects and expected response, and establishment of reserves. 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, 2003, and its Form 10-Q for the quarter and year-to-date period ended June 30, 2004. These and all previously filed docu ments are on file at the Securities and Exchange Commission and can be viewed on TXCO's website at www.txco.com. Copies are available without charge upon request from the Company.

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