TXCO Resources Inc. today provided an interim operations update. The company currently has a record eight rigs operating on its core, Maverick Basin acreage and nine rigs running overall. Spudded or re-entered a record 47 wells during the first half of 2007.

Continued its heavy oil sands cyclic steam project and prepared to begin an additional pilot.

Of the wells spudded or re-entered during the first half, 22 are on production, 13 are in or awaiting completion, two are shut in or awaiting evaluation, one was abandoned and nine are drilling. Maverick Basin wells currently under way include five targeting the Glen Rose Porosity and one each to the Pearsall, Georgetown and Pena Creek San Miguel.

Glen Rose-Maverick Basin

Twenty of the 47 wells begun during the first six months of this year targeted the Glen Rose Porosity interval. Twelve of the wells are on production, three are in completion and five are drilling. This includes six re-entries of Glen Rose Porosity wells drilled in late 2006 that did not perform as originally projected and were scheduled for re-entry during 2007. Initial results of these re-entries are positive with three of these wells now on production, one is in completion and two are drilling. Second-quarter Glen Rose Porosity net oil sales are estimated to average approximately 1,850 barrels of oil per day (bopd), up from 1,370 bopd in the first quarter.

Due to a one-time internal discrepancy in oil sales data, April and May sales were previously incorrectly reported in corporate presentations to be 2,100 bopd. Actual sales reported for April and May were 1,475 bopd and 1,925 bopd respectively. June's sales were 2,175 bopd despite both the near-record heavy rains that hampered South Texas operations and an oil pipeline serving the area that remains out of service. Cumulative quarterly sales from the Glen Rose Porosity were 168,425 bo for the second quarter of 2007 up from 123,300 bo for the first quarter.

Also in the Maverick Basin, TXCO began six wells during the first half targeting Glen Rose reefs and shoals. Two are on production, two are in or awaiting completion and two are shut in awaiting evaluation. For 2007, the Company currently projects a total of 36 vertical and horizontal Glen Rose wells in the Maverick Basin.

Glen Rose-Fort Trinidad

TXCO continues its geologic evaluation of the Fort Trinidad Field in East Texas, identifying at least five stacked Glen Rose shoals defined by three-dimensional seismic, historical production and well log records. Based on historical vertical well completions, primary production from the C-level shoal has totaled approximately 160 billion cubic feet equivalent of natural gas (bcfe) over the past 40 years. TXCO will initially concentrate its development efforts on the B-level shoal that has five vertical wells scattered across the lease block with cumulative gas production ranging from 1-8 bcfe per well.

Management believes the field's geologically defined composition is highly conducive for horizontal drilling. Due to diverse and fractional mineral ownership of the lease block, land and title work continue in preparation for initial horizontal drilling activity, with as many as seven new wells planned during the second half of 2007.