TXCO Resources Inc. reported record sales volumes and drilling activity for 2007 and updated its current operations.

Highlights include:

A 36 percent increase in combined oil and gas sales from the prior year.

A record 87 wells begun.

Nine drilling rigs currently operating.

Net oil and gas sales volumes for 2007 were an estimated 7.97 bcfe, a 36 percent increase from 5.85 bcfe in 2006. Oil sales for the year totaled 974,394 barrels, up 23 percent from 791,425 barrels in the prior year. The Company’s 2007 production mix was 73 percent oil and 27 percent natural gas. For 2007, TXCO spudded or re-entered a record 87 wells, up from 58 wells during 2006.

TXCO’s sales from the prolific Glen Rose Porosity oil play were 704,891 barrels, or 1,931 bopd, up from 683,285 barrels, or 1,872 bopd, in 2006. Fourth-quarter 2007 Porosity sales totaled 212,762 barrels, or 2,313 bopd, a 20 percent increase from the final quarter of 2006 and 3 percent above third-quarter 2007 results.

Overall fourth-quarter field activity and sales levels declined from the previous quarter, consistent with the Company’s seasonal activity slowdown due to the annual hunting season drilling moratorium on certain Maverick Basin leases.

Current Operations

Currently, TXCO has nine rigs operating, including seven on its core Maverick Basin acreage, one in the East Texas Fort Trinidad Field, and one in Oklahoma.

In the San Miguel oil sands pilot, the Company currently is drilling the second horizontal well as it converts its initial pilot to a Steam-Assisted Gravity Drainage (SAGD) process. The SAGD well pair is being drilled in between the existing cyclic steam wells, which will be converted to temperature-monitoring wells. A second 25 mmBtu steam generator is scheduled for delivery this month, doubling steam generation capacity on the pilot.

Drilling will begin shortly on a second oil sands pilot that will utilize the Fracture-Assisted Steamflood Technology (FAST) technique, proven by Conoco in years past. The wells will be drilled on a schedule consistent with expected deliveries of two new 50 mmBtu steam generators in the second quarter.

Tags: TXCO Resources Inc.