August 7

TXCO Resources Reports Strong Pearsall Well Flows

TXCO Resources Inc. (Nasdaq: TXCO) today provided initial test results on its Myers 2-683H well targeting the Maverick Basin’s Pearsall shale gas resource play.

Following completion of a five-stage fracture stimulation, the well (100 percent working interest through completion) flowed an average of approximately 3.5 million cubic feet of gas per day and 2,500 barrels per day of frac fluid at 3,875 psi flowing tubing pressure. Flow rates continue to rise as the well returns frac fluid. The well is TXCO’s third horizontal Pearsall well to be fracture stimulated this year and the first to be successfully treated with five stages. It is the first Pearsall well in which the horizontal lateral, 3,000 feet long, was fully cased, cemented and perforated for limited entry. Also, the Company conducted microseismic monitoring from a nearby offset well during the treatment, allowing it to observe and modify the stimulation in real time. The Myers well provides TXCO with valuable data that will be used to improve future frac designs on other Pearsall wells to be drilled and fracture-stimulated in the future.

TXCO’s combined Pearsall project area exposes the Company to the overpressured shale play on more than 848,000 gross acres (340,000 net acres) across the Maverick Basin in Southwest Texas.

Conference Call

The Company has scheduled a conference call for 10 a.m. CDT (11 a.m. EDT) today to further discuss current operations and financial results announced Wednesday. The call will be broadcast live via the Company Web site at http://www.txco.com/concall.html or by telephone at 877-387-9209 in the U.S. and Canada and 706-643-3820 for international callers. Passcode is 56389675. A replay will be available through Saturday, August 9, at 800-642-1687 (U.S./Canada) and 706-645-9291 (international), same passcode, and for 30 days at http://www.txco.com/concall.html.

About TXCO Resources

TXCO Resources is an independent oil and gas enterprise with interests in the Maverick Basin, the Gulf Coast region and the Marfa Basin of Texas, and the Midcontinent region of western Oklahoma. It 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. TXCO’s 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. It 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 budget and drilling plans, capital expenditures, production levels, the timing, number and cost of wells to be drilled, new projects and expected results, 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. TXCO undertakes no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. 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 December 31, 2007, and Form 10-Q for the quarter ended March 31, 2008. 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.

TXCO Resources Inc., San Antonio
Investors:
Roberto R. Thomae, 210-496-5300, ext. 214
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or
Media:
Paul Hart, 210-496-5300, ext. 264
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