1. Multi-Play, Multi-Pay In the Maverick Basin
IPAA Oil and Gas Investment Symposium New York – April 2004
(animation)
Thanks for this opportunity to briefly review the exciting multi-PLAY, multi-PAY potential in TXCO’s focus area: The Maverick Basin of Southwest Texas.
The Exploration Company has an exciting story to tell.
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James E. Sigmon
President and Chief Executive Officer

2. Corporate Information
Headquarters
Forward-Looking Statements
The Exploration Company
500 North Loop 1604 East, Suite 250
San Antonio, Texas 78232
Phone: (210)
Fax: (210)
Information presented herein which is 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 Such statements include those relating to estimated financial results, or expected prices, production volumes, reserve levels and number of drilling locations. 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 effecting 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, This report and TXCO’s previously filed documents are on file at the Securities and Exchange Commission and can be viewed on TXCO's Web site at copies of which are available from the Company without charge.
Contacts
James E. Sigmon
President and CEO
Roberto R. Thomae Vice President-Capital Markets
Please note our safe-harbor statement pursuant to provisions of the Private Securities Litigation Act.
And visit our web site for more information regarding portential factors that could affect TXCO’s operating and financial results going forward.
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3. TXCO Snapshot Founded 1979 – 25th Anniversary Year
Headquarters – San Antonio
Nasdaq Smallcap: TXCO
Trading Statistics
Current 3-month average daily volume – 157,000 shares
April 13, 2004, close – $4.20
2003
21.1 million shares traded
High – $6.75
Low – $2.62
Close – $6.10
TXCO is a Nasdaq smallcap based in San Antonio.
We traded over 21 million shares last year and ended the year up 105% from year-end 2002.
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4. TXCO Growth Strategy Shareholder Value Growth Principles:
Accumulate large lease position in core area
Control majority of exploration/development
activity and timetable
Use advanced technology to mitigate
drilling risk
3-D seismic
Horizontal drilling
Conservative debt profile
Our focus is on the drillbit as we work to increase shareholder value.
We’re focused on one area that we know well, targeting over 50 wells in our initial 2004 CAPEX.
If you want to explore the Maverick Basin you have to do business with us – and we want to do business with attractive partners.
We operate when possible, more than 85%, because we feel we know the area well and we have the infrastructure in place to be more efficient.
Our experienced technical staff uses new CAEX technology – 3-D seismic and horizontal drilling – to cut risk in this under-explored area.
We’ve had as many as 7 rigs running on our lease block in the past year. We have 3 running now as we came off an annual, November-to-January hunting season drilling moratorium on a large part of our acreage, and we’ll gradually increase that number going forward.
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5. TXCO Profile Multi-play/multi-pay focus on the Maverick Basin
Full-cycle exploration company
Lease/CAEX prospect generation/drill/produce
Large acreage position with hundreds of
internally generated growth opportunities
Balanced producer with infrastructure control
2004 is noteworthy because it marks our 25th anniversary as a company – and the 20th anniversary of the current management.
TXCO is a full-cycle exploration company that goes from the initial lease, to CAEX prospect generation, through to drilling and production.
We have a large acreage position – 480,000 gross acres in the Maverick Basin alone, with multiple plays.
We’re technically advanced – and technology has helped us succeed where others have failed.
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(Jurassic, Glen Rose reefs/shoals/porosity, Georgetown, etc.)

6. TXCO Operational Snapshot
Leasehold: 584,000 Gross Acres
Maverick Basin – 492,000 acres (427,600 net)
Largest Maverick Basin Mineral Leaseholder
Williston Basin – 92,000 acres (87,300 net)
Reserve Make Up – December 31, 2003
28.4 Bcfe – 59% Proved Developed
55% Gas – 15.6 Bcf
45% Oil – 2,129 MBbls
PV-10 – $56.8 million
Price deck: $30.06/Bbl oil, $5.77/MMbtu gas
Net Daily Production – Exit Rate March 2004
 MMcfe – Up 24% from March 2003 Exit Rate
 96% from Maverick Basin
38% Oil – 1,022 BOPD
62% Gas – 10.0 MMcfd
We have a large acreage position for a company our size – some 572,000 gross acres.
That includes 480,000 contiguous acres in the Maverick Basin.
Last month, we signed a letter of intent to acquire an additional 12,000 acres south of our existing Maverick Basin lease block.
When you consider the multiple plays we hold in the Maverick, TXCO has – in effect – something around 1¼ million acres under lease.
We also hold more than 90,000 acres in the Williston Basin.
I won’t focus on the Williston since the Maverick has our best prospects.
Our reserves are rising; 55% gas and 45% oil.
And so is production. Our exit rate at year-end 2003 was up 15% from the 2002 exit rate.
We’re not currently hedged. In February 2003, we placed a forward gas sales contract for about 1/3 of our daily gas production through year end.
We continue to monitor the current energy markets for potential 2004 forward contracting opportunities.
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7. TXCO’s Pipeline Synergy
80-mile system offers ongoing
cost savings
35 MMcfd capacity
Current throughput at half
of capacity
Added compression can boost
capacity to 100 MMcfd
Eagle
Pass C
TXCO acreage
Maverick-Dimmit
Pipeline System
Area Pipelines
Compressor station
Delivery points
Our infrastructure adds to our potential.
We bought this pipeline system in 2002, which generates cost savings and allows us to better control our own destiny as we develop new gas reserves.
We move a growing amount of third-party gas.
It also has significant excess capacity we can use as new gas reserves come on line in the area.
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Carrizo
Springs
MEXICO C

8. TXCO’s Maverick Basin Focus Area
Williston Basin
50 Miles
MaverickBasin
492,000 gross acres
More than 85% working interest
Over 95% 3-D seismic coverage
Seven current plays – from
1,000’ to 18,000’
More than 1,000 identified
drilling prospects

9. Maverick Basin Acreage Growth
,000
Burr Ranch
Dominant Acreage Position
Strong Infrastructure
Operational Synergies
Early Acreage Aggregator
,000
Holliman
,000
Brown
,000
Pena Creek
Bandera Johnston
,000
Burr
Wipff
Chittim A
,000
Saner
Chittim B
Comanche Ranch
Amistad
George
Callahan
,200
Alkek
,400
Paloma
Kincaid
Year Acreage
(manual animation)
We’ve built up this contiguous lease block since But as recently as 1997 we still held only about 50,000 acres.
We’ve expanded that position as leases became available on-trend, as we built on our knowledge of the geology and drilling success.
We have a dominant acreage position.
TXCO wants to play to our strength -- we’re looking for more, attractive opportunities in the Maverick Basin.
For example, we don’t have ConocoPhillips’ Sacatosa Field, that’s the hole in the middle of our block. We’re very interested in it and believe its acquisition would be very synergistic to our existing operations.
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10. Maverick Basin: Prospect Rich
Escondido
1,000’ +/-
Olmos/CBM
1,500’ +/-
San Miguel
1,800’ +/-
Georgetown
3,000’ +/-
Glen Rose Porosity
5,000’ +/’-
Glen Rose Shoal/Reef
6,000’ +/-
(click through animation)
This cube illustrates the multi-pay potential of the prospect-rich Maverick Basin – from 1,000 feet to below 16,000 feet.
Most of the the opportunities are less than 7,000 feet deep, including the workhorse Glen Rose; the shallower Georgetown, with its expanding potential, the shallow San Miguel oil sands underlying our Olmos coalbed methane play; and the even shallower Escondido gas.
All in addition to the exciting, deep Jurassic. Previously unexplored in the Maverick Basin, but a great producer elsewhere around the Gulf of Mexico for years.
Historically, the basin has produced from more than 20 different zones since the 1920s, so there’s lots of potential.
TXCO has produced hydrocarbons from more than a dozen of those zones to date.
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Jurassic
16,000’ +/-
Maverick Basin has 20+ productive zones

11. Georgetown Faults: ‘Seismic Looks Like Broken Glass’
7-for-7 Georgetown gas well completions using new seismic technique
(animation)
Now the Georgetown… a tight formation – complex and highly faulted.
This gives you an idea what the formation looks like on just 2 leases.
The seismic looks like broken glass due to all the fracturing and faulting.
When you hit one of those faults, you can get very good return rates, whether oil or gas.
All of those grooves, bumps and dips in these two coherency images are faults and fractures, they look like a broken windshield.
Historically, we’ve had mixed results drilling the Georgetown, but since September 2003 we’re 8 for 8 on new wells, using an advanced coherency seismic processing technique that more accurately predicts the location of attractive formation faults and fractures.
The lower map shows where 7 successful gas wells are located, plus we completed an oil well not located on either of these images.
Initial seismic review indicates we have literally hundreds of potential drilling locations across our lease block.
The Georgetown will get the lion’s share of our 2004 drilling capex – 25 wells. NEXT SLIDE
25 wells planned in 2004
Blanket structure – 300,000+ acres
400+ sections with 3-D seismic coverage
Hundreds of drillable locations
Estimated cost per well:
$630,000 to $785,000
Gross reserves targeted/well:
Oil – 50 to 100 MBbls
Gas – 2 Bcfe

12. Georgetown: Model Fault Pattern
Clay model illustrates Georgetown’s extensive faulting systems
This clay model depicts the extensive faulting occurring with frequency across most every section of our lease block.
We have over 300,000 acres, or more than 460 square miles, that are prospective for Georgetown drilling locations.
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Source: Cloos, “Experimental Analysis of Gulf Coast Fracture Patterns,” 1967

13. Glen Rose: Three Plays in One
Shoal
Porosity Interval
Porosity discovery – 2002
27 wells drilled to date
20 sq. miles identified
Est MM Bbls in place
Production to date: 1.5+ MM Bbls
D defined prospects
Porosity – 40º oil, fresh water
Shoals / Reefs – gas prone
2004 drilling budget:
8 Shoal/Reef wells
12 Porosity wells
First, the Glen Rose is really three separate plays in one.
The Reef and Shoal have been attractive targets for years since we’ve defined them well with both 2-D and 3-D seismic.
Added to these plays is the Glen Rose Porosity, discovered two years ago and expanded extensively in 2003 by horizontal drilling and advanced 3-D seismic processing.
Porosity wells have high oil potential… they’re more expensive to drill but have proved attractive – and very profitable.
We’ve produced nearly 1.5 million barrels to date.
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Reef

14. The Glen Rose Plays 200+ Prospective wells
Paloma Lease
Reef/Shoal
Chittim Lease
Reef/Shoal
200+ Prospective wells
3-D/2-D defined
Gross Reserves Targeted/well
Paloma – 2.5 Bcfe
Comanche – 100 to 400 MBbls
Drilling and Completion Costs
Paloma/Chittim
Vertical – $450,000
Horizontal – $750,000
Comanche
Vertical – $750,000
Horizontal – $900,000 to $1.1 million
50%WI with new operator – April 2004
We think of the Glen Rose and its multiple reef and shoal targets as our bread and butter.
This amplitude map shows reefs in the formation, which tend to be small but offer an excellent return on investment because drilling costs are comparatively low.
The Glen Rose play is targeted with 16 wells in the 2004 CAPEX.
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Comanche Lease
Porosity

15. Pena Creek Infill Drilling Under Way
2004 drilling locations
 Producing oil wells
90% success rate on 23 San
Miguel wells drilled in 2003
40 to 20 acre downspacing
raised production 77% in 2003
80, 3-D defined infill locations Cost: $100,000 to $240,000/well
10 wells planned in 2004
100% WI
Then we have the San Miguel on our Pena Creek lease.
We’ve had good success there.
We believe the Pena Creek will offer long-term, low-risk, stable oil reserves as we increase field density to 20-acre spacing.
Through infill drilling we have almost doubled the field’s production since we acquired the field in 2002.
Our engineers have identified at least 80 locations in the existing sandstone, and this map shows 23 wells drilled in 2003 alone.
This infill drilling is a good example of the exploitation opportunities we now have.
The wells are inexpensive… around $250,000 each.
There are additional sands above the primary producing zone that could have potential; we continue looking into them.
Overall, we target reserves of upwards of 30,000 barrels per well.
The 2004 CAPEX calls for 10 new Pena Creek/San Miguel wells.
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16. Olmos/CBM Play: Coalbed Distribution in Maverick Basin
250,000+ acre lease block
36 wells dewatering
Saturated coal has up to
350 scf/ton gas
High-volatile bituminous C
Typical CBM well: $150,000
1,000+ drillable locations
100% WI
1 Tcf gross unrisked
resource potential .
TXCO’s coalbed methane play is the first in Texas.
Olmos coal is still actively mined in Mexico… it’s a gassy bituminous-grade coal.
We have no funds earmarked for additional drilling in 2004 as we continue dewatering on 36 existing CBM wells.
We see positive signs as gas production from some wells continues to rise, very consistent with similar CBM projects elsewhere.
It’s not economic yet, but long term, we think TXCO will gain important gas reserves because the Olmos coal underlies about half of our Maverick Basin lease block.
This play alone could result in over 1,000 well locations.
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TXCO Acreage
Desorption Tests 

17. Maverick Basin’s Jurassic Play
Humble/Exxon – 1956
Taylor 132-1
Shell – 1953 
First well to test Jurassic in
Maverick Basin
Gas present, non-commercial
Source rocks – sands, shales,
carbonates
Sligo/Pearsall completion
attempts under way
Drilling of second well pending
TXCO holds Jurassic rights
across 300,000+ acres
And last – but certainly not least – I want to talk about the Jurassic.
We’re really excited about the Taylor wildcat, the first well to reach the Jurassic in the Maverick Basin after three earlier attempts, going back to the 1950s, missed the formation.
We’re cautiously optimistic that this well could prove commercial.
We’ve confirmed the presence of previously untested marine sediments and good porosities, along with some gas shows, to date.
The Taylor well reached total depth of 22,400 feet in December.
The previous operator, Blue Star Oil & Gas Ltd., evaluated more than a mile of Jurassic-age rocks, starting from the bottom up.
TXCO became the operator in late February after Blue Star found gas in non-commercial quantities at lower intervals.
Currently we are testing the upper Jurassic at 14,942 to 15,140 feet and 15,292 to 15,400 feet.
Plans for a 2nd Jurassic well await results of testing, which are under way right now and could continue for another 30 days.
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Conoco – 1977

18. Strong Cash Flows, Conservative Debt
EBITDA, EBITDAX, Cash Flows
$ Millions
2003 operating cash flows were more than double 2002
EBITDA
EBITDAX
Cash Flows
Debt/Asset Ratio
$ Millions
Assets
Debt
4-Year Compound Annual Growth Rate: 46%
We have strong – and growing – cash flow, Ebitdax and Ebitda to support our ambitious drilling program, for 5 years running.
Note that TXCO’s operating cash flows for 2003 were over $15 million, more than double 2002 cash flow.
We expect this trend to continue at a healthy rate.
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39.3%
Cash Flows are net cash provided by operating activities. See the Investor Relations section of the Company’s Web site at for a reconciliation of non-GAAP financial measures.
13.6%
9.1%
4.1%
2.9%

19. Reserves and Production Rising
Average Production
Total Proved Reserves – Bcfe
28.4 Bcfe
MMcfed
13.2
13.5E
12.0
Escondido – Gas
Georgetown – Oil
Georgetown – Gas
9.1
8.1
San Miguel – Oil
Glen Rose – Oil
Our production is rising with a healthy mix of 44% oil vs. 56% gas.
The same trend shows up in our reserve growth.
Note that production comes from a varied mix of reserves – all from the Maverick Basin, except a small portion in the Williston Basin.
We doubled our reserves in 2001, then again in 2002.
While growth lagged at midyear 2003, we expect greater appreciation in our reserves at 12/31.
With complete 2003 production history now in place, we should see reserve growth from our Georgetown, Glen Rose and San Miguel plays.
(reserve changes)
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Glen Rose – Gas
72% CAGR in proved reserves over past 3 years
– primarily from the drill bit
60% PDP at YE 03
All Maverick Basin reserves
found above 7,000’ of depth
Other Formations
Williston Basin – Oil
  in Bcfe
2002
2003 
Williston Basin – Oil
1.8
0.99
-45%
Other – Oil and Gas
0.5
0.52
+4%
Glen Rose – Gas
13.6
12.4
-9%
Glen Rose – Oil
2.7
1.6
-41%
San Miguel – Oil
4.3
9.2
114%
Georgetown – Gas
0.4
2.4
+500%
Georgetown – Oil
0.1
0.86
+760%
Escondido – Gas
0.2
0.34
+70%

20. Rolling 3-Year Production Replacement
J.S. Herold’s Smallcap Universe production replacement rate was 190% during
And these are key numbers for our future:
For the last 5 years, we’ve more than replaced our production on an ongoing basis.
While production replacement exceeded 340% in 2002 and 186% in 2003 – again tracking favorably in comparison to our peers.
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21. CAPEX Guidance 2004 initial budget: $23.4+ million 82% for drilling:
$350,000
2004 initial budget:
$23.4+ million
82% for drilling:
$19.2+ million
Georgetown 25 Wells
Taylor Well
Completion
Glen Rose
Shoals/Reefs
8 Wells
$27.1
$37.5
$11.2
73%
77%
52%
82%
$ Millions
– 120
– 90
– 60
– 30
– 0
$23.4+  25 37 71
51E
$17.8
# Wells
5-Year CAPEX/Drilling
New Wells
Drilling
Other 
This slide shows our multi-play approach in the Basin for 2004 – and high level of drilling will be our 2nd-busiest drilling year ever.
Our drilling and development Capex focuses on five different formations with an emphasis on the Georgetown, (25 wells) making good use of a seismic processing technique that appears to greatly enhance our success rate in this complex formation.
We continue drilling three types of Glen Rose targets (16 wells), in addition to 10 infill locations in our San Miguel oil play.
We have no Capex for drilling in our CBM play in 2004 as it continues to de-water.
While we have no Capex for the shallow Escondido initially, further development of the shallow Escondido gas play will continue as pipeline infrastructure grows along with the addition of Georgetown gas production in the area.
The point is we have a lot going on – in distinct plays with a broad range of low, medium and high risk potential – ALL in the Maverick Basin.
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San Miguel
10 Wells
Glen Rose Porosity
8 New Wells
4 Re-entries
51 proposed wells, 4 re-entries

22. 2004 Reserve Exposure Risk Mix
Low Risk – 15%
Escondido
San Miguel (Pena Creek)
Glen Rose Shoal
Medium Risk – 70%
Olmos/CBM
Georgetown
Glen Rose Reef
Glen Rose Porosity
High Risk – 15%
Jurassic
Medium Risk
High Risk
Despite our name – The EXPLORATION Company – we have a well-balanced mix of plays with varying risk profiles.
We have low-risk projects, such as the Pena Creek/San Miguel oil play and the Glen Rose shoal.
Medium-risk, such as the horizontal Georgetown and Glen Rose reef and porosity plays, for both oil and gas.
And the high-risk Jurassic that offers the potential for high rewards with a possible exposure of only about $300,000.
While all of our plays are stacked within the Maverick Basin, we don’t have all our eggs in one basket.
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Low Risk

23. 3-Year Performance Comparisons
J.S. Herold’s Smallcap Universe spent $2.57/Mcfe to replace reserves by drillbit during
F&D Drillbit Costs
Rolling Gross Profit
Return-On-Investment Ratio
These 3-year metrics through 2003 show our progress is in the right direction.
R-O-I, both drillbit and all source, is very competitive.
While historical F-and-D costs remain very favorable compared to our peers, continued improvement is unlikely until reserve realizations get back in line.
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Drillbit Only All Sources
Gross Profit is oil and gas revenues less operating expenses and G&A costs. Gross Profit Return on Investment is Gross Profit divided by Finding and Development Costs.
Drillbit Finding and Development costs per Mcfe include exploration costs and actual drilling costs incurred compared to the volume of new reserves added during the year.

24. TXCO Capitalization $132 million enterprise value at March 31, 2004*
25.4 million diluted common shares at March 31
23.6% held by insiders
4.6 million issued shares
1.4 million in stock options
$16 million in redeemable preferred
stock issued in August 2003
$13 million reserve-base credit facility
outstanding balance at March 31
Our year-end enterprise value was just under $160 million.
TXCO has 23.4 million diluted common shares and a 16,000-share redeemable preferred issue we made last August.
TXCO remains conservatively leveraged with room to grow.
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*Enterprise value is diluted shares, times share price, plus debt, plus preferred equity, less cash and equivalents.

25. 3-Year Comparative Stock Performance
250%
200%
150%
100%
50%
TXCO
S&P 600 SC
TXCO Peers
AMEX NG Index
Glen Rose Porosity
Oil Discovery
Jurassic
Drilling
TXCO’s stock performance over the last three years compares very well with its peers and similar-sized firms.
(Peers are: Gasco, Parallel, Equity, Carrizo, Brigham, Edge, Petroquest, Wiser, Prima and Clayton Williams)
Apr-01
Jul-01
Oct-01
Jan-02
Apr-02
Jul-02
Oct-02
Jan-03
Apr-03
Jul-03
Oct-03
Jan-04
Apr-04
TXCO – The Exploration Company; S&P 600 SC – Standard & Poor’s 600 Smallcap Index; TXCO Peers – GASE.OB, PLLL, EQTY, CRZO, BEXP, EPEX, PQUE, WZR, PENG, CWEI; AMEX NG Index – American Stock Exchange Natural Gas Index
Source: Exchanges

26. Why Own TXCO? Dominant Player in Focus Area
Integrated Upstream/Midstream Assets
Proven Exploration Track Record
Generating in-house prospects from 3-D analysis
attracting industry partners and investors
History of drilling success
Strong Multi-Pay Potential
Broad prospect inventory in core area
Focused Exploration/Development Efforts
In Maverick Basin of South Texas
I don’t see The Exploration Company as a good story. I see it as a great story -- sound management. a good technical team, a conservative balance sheet, growing reserves, good cash flows and a realistic chance at explosive growth.
So… why own TXCO?
We are the dominant player in the basin – an area we know very well.
We have integrated assets that create cost savings – and we control most of our own production.
We’re building on a record of exploration success – over an 85% success rate for 5 years running.
TXCO will stay focused on the Maverick Basin and its multi-pay potential.
We’re hunting with a rifle, not a shotgun. We know the Maverick Basin and we’re proving that our strategies work. We’re focused.
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27. Multi-Play, Multi-Pay In the Maverick Basin
Thanks for your interest, and I welcome your questions.
Visit us on the Web at
for more information about The Exploration Company