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 3, 2006
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 Registrant issued a press release today updating on third-quarter and first-nine-months 2006 results. The text of the press release has been provided as Exhibit 99.1 with this Form 8-K.
The press release contained a discussion of Ebitdax, defined as earnings before income taxes, interest, depreciation, depletion, amortization, impairment, abandonment and exploration expense and certain other non-cash items, 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 quarter and nine-month period ended September 30, 2006 and 2005. 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 9.01:  Financial Statements and Exhibits
	Exhibit Number	Description
	99.1	Registrant's press release dated November 3, 2006, titled "The Exploration Company Reports Record Financial Results"
The information contained in this report under Item 2.02, including the exhibits, 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 6, 2006
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
Friday, November 3, 2006	Investors: Roberto R. Thomae
	(210) 496-5300 ext. 214, bthomae@txco.com
	Media: Paul Hart
	(210) 496-5300 ext. 264, pdhart@txco.com
The Exploration Company Reports Record Financial Results
SAN ANTONIO -- Nov. 3, 2006 -- The Exploration Company (Nasdaq:TXCO) today reported record earnings for the third quarter and nine months ended Sept. 30, 2006. Highlights include record:
-   Nine-month earnings. - -   Third-quarter and nine-month operating income. - -   Total assets and revenues.
Third Quarter
TXCO's net income for the third quarter was $6.4 million, equal to $0.19 per share, in contrast to net income of $15.3 million, or $0.53 per share, in the third quarter of 2005, which included a one-time, $24.5 million pre-tax gain from the sale of selected assets in TXCO's Maverick Basin operations area to EnCana Oil & Gas (USA) Inc. All per-share amounts are on a diluted basis. Quarterly operating income rose sharply to a record $8.4 million, compared with $1.4 million reported for the year-earlier period.
Total revenues rose to a record $21.6 million, a 26 percent increase from $17.1 million in the 2005 period. Oil and gas sales of $18.1 million rose 65 percent on record volumes and record oil prices, offset by lower gas gathering revenues of $3.5 million. A 119 percent increase in oil sales volumes more than offset a decline in natural gas volumes. The Company's 2006 drilling budget focuses on the oil-prone Glen Rose Porosity play with a corresponding increase in oil output.
Nine-Month Period
For the January-September period, TXCO reported record net income of $11.6 million, equal to $0.35 per share. In the year-earlier period, net income was $11.0 million, or $0.38 a share, including the asset-sale gain mentioned above. Operating income for the nine months was sharply higher at $18.1 million, more than 400 percent above the $3.2 million reported in the prior-year period. Revenues were a record $57.2 million, up 21 percent from $47.2 million for the 2005 period. TXCO's assets rose to $145.3 million, 33 percent above the $109.5 million recorded at year-end 2005.
Net cash provided by operating activities for the nine months was $14.0 million, a 13 percent increase from $12.3 million in the year-earlier period. Ebitdax -- earnings before income taxes, interest, depreciation, depletion, amortization, impairment, abandonment and exploration expense -- rose to a record $32.0 million, an 84 percent increase from $17.4 million in 2005. Ebitda -- Ebitdax less exploration expense -- was $31.1 million, double the $15.6 million reported in the 2005 period. See TXCO's Web site at www.txco.com/gaaprecon.html for a reconciliation of non-GAAP financial measures.
-- More --

Management's Perspective

     "TXCO sustained its strong financial performance in the third quarter as rising oil sales from the expansion of our successful Glen Rose Porosity play combined with record oil prices," said President and CEO James E. Sigmon. "Our record cash flow metrics and low debt levels allow us to anticipate an ambitious drilling program in 2007.

     "I want to emphasize once again that our strong financial and operational results are based on organic, drillbit growth as we continue to successfully develop our Maverick Basin leasehold. We look to continue the trend of creating measurable value for our shareholders. Key to our objectives are the Porosity play -- as well as our new tar sand project, the highly prospective Pearsall formation and the Marfa Basin in West Texas. Our growth prospects have never been stronger."

About The Exploration Company

     The Exploration Company is an independent oil and gas enterprise with interests primarily in the Maverick Basin of Southwest Texas and the Marfa Basin in West Texas. 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 developing 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 Nasdaq's Global Select Market under the symbol "TXCO."

Forward-Looking Statements

     Statements in this press release that 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 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 b e 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, 2005, and its Form 10-Q for the quarter ended June 30, 2006. 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.

(Financial Information and Selected Operational Tables Follow)

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THE EXPLORATION COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
($ in thousands)	September 30, 2006		December 31, 2005
Assets
Current Assets
Cash and equivalents		$6,029	$6,083
Accounts receivable, net		9,573	9,344
Prepaid expenses and other		2,886	1,620
Total Current Assets		18,488	17,047
Property and Equipment, net - successful efforts    method of accounting for oil and gas properties		117,428	84,467
Other Assets
Deferred tax asset		8,836	7,242
Other assets		590	780
Total Other Assets		9,426	8,022
Total Assets		$145,342	$109,536
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THE EXPLORATION COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
($ in thousands)	September 30, 2006			December 31, 2005
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable, trade		$7,818		$10,003
Undistributed revenue		1,414		2,479
Current income taxes payable		2,090		4,952
Other payables and accrued liabilities		4,290		4,297
Derivative settlements payable		217		151
Accrued derivative obligation - short-term		932		2,084
Long-term debt, current portion		124		262
Total Current Liabilities		16,885		24,228
Long-Term Liabilities
Long-term debt, net of current portion		1		1
Accrued derivative obligation - long-term		-		461
Asset retirement obligation		1,691		1,565
Total Long-Term Liabilities		1,692		2,027
Stockholders' Equity
Preferred stock, Series A & Series B; authorized 10,000,000 shares       issued and outstanding -0- shares		- -		- -
Common stock, par value $.01 per share; authorized       50,000,000 shares; issued 33,030,615 and 29,479,697 shares,       outstanding 32,930,815 and 29,379,897 shares		332		295
Additional paid-in capital		121,583		89,680
Retained earnings / (accumulated deficit)		7,021		(4,622	)
Less treasury stock, at cost, 99,800 shares		(246	)	(246	)
Accumulated other comprehensive loss, net of tax		(1,925	)	(1,826	)
Total Stockholders' Equity		126,765		83,281
Total Liabilities and Stockholders' Equity		$145,342		$109,536
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THE EXPLORATION COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
	Three Months Ended			Three Months Ended
(in thousands, except earnings per share data)	September 30, 2006			September 30, 2005
Revenues
Oil and gas sales		$18,067		$10,950
Gas gathering operations		3,511		6,176
Other operating income		5		10
Total Revenues		21,583		17,136
Costs and Expenses
Lease operations		1,816		1,613
Production taxes		879		608
Exploration expenses		320		476
Impairment and abandonments		-		780
Gas gathering operations		3,555		6,255
Depreciation, depletion and amortization		4,539		4,370
General and administrative		2,105		1,603
Total Costs and Expenses		13,214		15,705
Income from Operations		8,369		1,431
Other Income (Expense)
Derivative mark-to-market gain (loss)		1,319		(7,099	)
Derivative settlements loss		(949	)	(547	)
Interest expense		(73	)	(1,076	)
Interest income		258		11
Loan fee amortization		(52	)	(32	)
Loss on sale of assets		-		24,541
Total Other Income (Expense)		503		15,798
Income (loss) before income taxes		8,872		17,229
Income tax expense		2,484		1,940
Net Income (Loss)		$6,388		$15,289
Earnings (Loss) Per Share
Basic earnings (loss) per share		$0.20		$0.54
Diluted earnings (loss) per share		$0.19		$0.53
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THE EXPLORATION COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
	Nine Months Ended			Nine Months Ended
(in thousands, except earnings per share data)	September 30, 2006			September 30, 2005
Revenues
Oil and gas sales		$44,389		$27,511
Gas gathering operations		12,730		19,683
Other operating income		40		30
Total Revenues		57,159		47,224
Costs and Expenses
Lease operations		5,328		5,021
Production taxes		2,170		1,599
Exploration expenses		960		1,827
Impairment and abandonments		1,094		1,935
Gas gathering operations		12,930		19,077
Depreciation, depletion and amortization		10,892		10,479
General and administrative		5,666		4,126
Total Costs and Expenses		39,040		44,064
Income from Operations		18,119		3,160
Other Income (Expense)
Derivative mark-to-market gain (loss)		1,787		(10,832	)
Derivative settlements loss		(2,540	)	(1,000	)
Interest expense		(209	)	(2,878	)
Interest income		471		35
Loan fee amortization		(174	)	(68	)
Loss on sale of assets		(11	)	24,541
Total Other Income (Expense)		(676	)	9,798
Income (loss) before income taxes		17,443		12,958
Income tax expense		5,799		1,990
Net Income (Loss)		$11,644		$10,968
Earnings (Loss) Per Share
Basic earnings (loss) per share		$0.37		$0.39
Diluted earnings (loss) per share		$0.35		$0.38
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THE EXPLORATION COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
	Nine Months Ended			Nine Months Ended
(in thousands)	September 30, 2006			September 30, 2005
Operating Activities
Net income (loss)		$11,644		$10,968	)
Adjustments to reconcile net income (loss) to    net cash provided by operating activities:
Depreciation, depletion and amortization		11,066		10,547
Impairment and abandonments		1,094		1,935
Loss on sale of assets		11		(24,541
Non-cash stock compensation expense		974		-
Non-cash derivative mark-to-market (gain) loss		(1,787	)	10,832
Non-cash interest expense and accretion of liability        - redeemable preferred stock		- -		684
Changes in operating assets and liabilities:
Receivables		(229	)	(4,708	)
Prepaid expenses and other		(1,251	)	(451	)
Accounts payable and accrued expenses		(6,053	)	8,256
Deferred tax asset		(1,519	)	(1,198	)
Net cash provided by operating activities		13,950		12,324
Investing Activities
Development and purchases of oil and gas properties		(38,395	)	(35,606	)
Purchase of other equipment		(5,762	)	(20	)
Proceeds from sale of assets		19		78,000
Net cash (used) by investing activities		(44,138	)	42,374
Financing Activities
Proceeds from issuance of common stock, net of expenses		30,272		1,487
Proceeds from long-term debt obligations		9,300		15,001
Payments on long-term debt obligations		(9,300	)	(32,000	)
Proceeds from installment obligations		178		122
Payments on installment obligations		(316	)	(1,697	)
Redemption of preferred stock		-		(16,000	)
Net cash provided by financing activities		30,134		(33,087	)
Change in Cash and Equivalents		(54	)	21,611
Cash and equivalents at beginning of period		6,083		3,118
Cash and Equivalents at End of Period		$6,029		$24,729
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THE EXPLORATION COMPANY SELECTED OPERATING DATA
	Three Months Ended					Nine Months Ended
($'s in thousands, except average prices)	Sept. 30, 2006		Sept. 30, 2005			Sept. 30, 2006		Sept. 30, 2005
Net cash provided in operating activities	$	4,050	$	2,716	$		13,950	$	12,324
Ebitdax *		13,586		7,057			32,038		17,401
Ebitda *		13,265		6,581			31,078		15,574
Debt to asset ratio		0.1%		24.7%			0.1%		24.7%
Sales
Oil:
Sales, in barrels (MBbl)		242		110			588		266
Average realized sales price per barrel	$	66.51	$	60.23	$		64.68	$	53.00
Natural Gas:
Sales, in MMcf **		278		499			864		1,902
Average realized sales price per Mcf	$	7.02	$	8.62	$		7.38	$	7.05
Equivalent Basis:
Sales in MBOE		289		194			732		583
Average realized sales price per BOE	$	62.59	$	56.57	$		60.66	$	47.19
Sales in MMcfe		1,732		1,161			4,390		3,498
Average realized sales price per Mcfe	$	10.43	$	9.43	$		10.11	$	7.86
Other Operating Data
Total lifting costs	$	2,696	$	2,221	$		7,498	$	6,620
Total lifting costs per BOE	$	9.34	$	11.48	$		10.25	$	11.35
Lifting costs per Mcfe	$	1.56	$	1.91	$		1.71	$	1.89
Sales volume - oil properties - MBbl		240		105			582		246
Oil prop. lifting costs (Incl Prod & Sev Tax)	$	2,169	$	1,145	$		5,920	$	3,358
Oil prop. lifting costs per Barrel	$	9.02	$	10.91	$		10.17	$	13.66
Glen Rose Porosity - volumes - MBbl		215		77			506		133
Glen Rose Porosity lifting costs per Barrel	$	6.57	$	3.98	$		6.53	$	4.56
Sales volume - gas properties - MMcf**		252		473			796		1,787
Gas prop. lifting costs (Incl Prod & Sev Tax)	$	548	$	1,076	$		1,600	$	3,262
Gas prop. lifting costs per Mcf	$	2.18	$	2.28	$		2.01	$	1.83
Total depletion cost per BOE	$	15.57	$	23.30	$		14.70	$	17.70
Total depletion cost per Mcfe	$	2.60	$	3.72	$		2.45	$	2.95
* Please see TXCO's Web site at www.txco.com for a reconciliation of these non-GAAP financial measures.
** Quantities reflect impact of gas production sold to EnCana Oil & Gas (USA) Inc., effective Sept. 1, 2005.
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