FOURTH AMENDMENT TO CREDIT AGREEMENT

FOURTH AMENDMENT TO CREDIT AGREEMENT


BETWEEN


THE EXPLORATION COMPANY OF DELAWARE, INC. TXCO ENERGY CORP.



AND


GUARANTY BANK, FSB AS LENDER


Effective as of November 1, 2006

__________________________________
REVOLVING LINE OF CREDIT OF UP TO $50,000,000 ___________________________________

TABLE OF CONTENTS PAGE   ARTICLE I

FOURTH AMENDMENT TO CREDIT AGREEMENT   This FOURTH AMENDMENT TO CREDIT AGREEMENT (this " Fourth Amendment ") is made and entered into effective as of November 1, 2006, between THE EXPLORATION COMPANY OF DELAWARE, INC. , a Delaware corporation, and TXCO ENERGY CORP. , a Texas corporation (" TXCO ") (collectively, the " Borrower ") and GUARANTY BANK, FSB, a federal savings bank (the " Lender ").   W I T N E S S E T H   WHEREAS, the above named parties did execute and exchange counterparts of that certain Credit Agreement dated June 30, 2004, as amended by Letter Agreement dated August 18, 2004, Letter of Credit Agreement dated October 7, 2004, Letter Agreement dated November 3, 2004, Letter Agreement dated March 15, 2005, First Amendment to Credit Agreement dated March 24, 2005, as further amended by Waiver and Second Amendment to Credit Agreement dated August 23, 2005, and as further amended by Third Amendment to Credit Agreement dated December 15, 2005 (the " Agreement "), to which reference is here made for all purposes;   WHEREAS, the parties desire to include TXCO as a Borrower;   WHEREAS, the parties subject to and bound by the Agreement are desirous of amending the Agreement in the particulars hereinafter set forth;   NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties to the Agreement, as set forth therein, and the mutual covenants and agreements of the parties hereto, as set forth in this Fourth Amendment, the parties hereto agree as follows:     ARTICLE I DEFINITIONS   1.01  Terms Defined Above . As used herein, each of the terms " Agreement ," " Borrower ," " Fourth Amendment, " " Lender, " and " TXCO " and shall have the meaning assigned to such term hereinabove.   1.02  Terms Defined in Agreement . As used herein, each term defined in the Agreement shall have the meaning assigned thereto in the Agreement, unless expressly provided herein to the contrary.   1.03  References . References in this Fourth Amendment to Article or Section numbers shall be to Articles and Sections of this Fourth Amendment, unless expressly stated herein to the contrary. References in this Fourth Amendment to "hereby," "herein," hereinafter," hereinabove," "hereinbelow," "hereof," and "hereunder" shall be to this Fourth Amendment in its entirety and not only to the particular Article or Section in which such reference appears.   1.04  Articles and Sections . This Fourth Amendment, for convenience only, has been divided into Articles and Sections and it is understood that the rights, powers, privileges, duties,    
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  and other legal relations of the parties hereto shall be determined from this Fourth Amendment as an entirety and without regard to such division into Articles and Sections and without regard to headings prefixed to such Articles and Sections.
  1.05  Number and Gender . Whenever the context requires, reference herein made to the single number shall be understood to include the plural and likewise the plural shall be understood to include the singular. Words denoting sex shall be construed to include the masculine, feminine, and neuter, when such construction is appropriate, and specific enumeration shall not exclude the general, but shall be construed as cumulative. Definitions of terms defined in the singular and plural shall be equally applicable to the plural or singular, as the case may be.   ARTICLE II AM