Newfield Exploration Co., Houston, (NYSE: NFX) plans to acquire all of the assets of San Antonio-based TXCO Resources Inc. (Nasdaq: TXCO) for $223 million in cash via court auction.

TXCO filed for protection under Chapter 11 in the U.S. Bankruptcy Court for the western district of Texas in May. The Newfield offer is subject to higher and better offers, due by Jan. 6. There is a 3% break-up fee to Newfield.

At year-end 2008, TXCO had proved reserves of 81.7 billion cu. ft. equivalent (56% oil). Total production in 2008 was 9.2 billion cu. ft. equivalent. It held 160,000 gross developed acres (66,700 net) and 1.1 million gross undeveloped acres (694,000 net) in Texas, Oklahoma and Louisiana. Assets included 749 gross producing wells (457 net).

The company’s core operations are in the Maverick Basin of South Texas, which is prospective for the Pearsall and Eagle Ford shales, and the San Miguel heavy oil sands. It also holds interests in the Marfa Basin in West Texas, the Fort Trinidad area of East Texas, and in the Midcontinent region of western Oklahoma.

In February, TXCO retained Goldman Sachs & Co. to review strategic alternatives and in August retained Global Hunter Securities LLC.