TXCO RESOURCES INC.
CODE OF BUSINESS CONDUCT AND ETHICS
This Code of Business Conduct and Ethics covers a wide range of business
practices and procedures. It does not cover every issue that may arise, but
it sets out basic principles to guide all employees, officers and directors
of the Company. All of our employees, officers and directors must conduct
themselves accordingly and seek to avoid even the appearance of improper
behavior. The Code should also be provided to and followed by the Company’s
agents and representatives, including consultants.
If a law conflicts
with a policy in this Code, you must comply with the law; however, if a local
custom or policy conflicts with this Code, you must comply with the Code. Any
variances between local customs or policies and this Code should be brought
to the attention of management or the directors. If you have any questions
about these conflicts, you should ask your supervisor how to handle the
Those who violate the
standards in this Code will be subject to disciplinary action. If you are
in a situation that you believe may violate or lead to a violation of this
Code, follow the guidelines described in Section 14 of this Code.
1. Compliance with
Laws, Rules and Regulations
Obeying the law, both
in letter and in spirit, is the foundation on which this Company’s ethical
standards are built. All employees, officers and directors must respect and
obey the laws of the cities and states in which we operate and our country.
Although not all employees, directors and officers are expected to know the
details of these laws, it is important to know enough to determine when to
seek advice from supervisors, managers or other appropriate personnel.
The Company holds
information and training sessions to promote compliance with laws, rules and
regulations, including insider-trading laws.
2. Conflicts of Interest
A "conflict of
interest" exists when a person’s private interest interferes in any way
with the interests of the Company. A conflict situation can arise when an
employee, officer or director takes actions or has interests that may make it
difficult to perform his or her Company work objectively and effectively.
Conflicts of interest may also arise when an employee, officer or director,
or members of his or her family, receives improper personal benefits as a
result of his or her position in the Company. Loans to, or guarantees of
obligations of, employees, officers or directors or their family members may
create conflicts of interest.
It is almost always a
conflict of interest for a Company employee, officer or director to work
simultaneously for a competitor, customer or supplier. The best policy is to
avoid any direct or indirect business connection with our customers,
suppliers or competitors, except on our behalf.
Conflicts of interest
are prohibited as a matter of Company policy, except as approved by the Board
of Directors. Conflicts of interest may not always be clear-cut, so if you
have a question, you should consult with senior management or the Company’s
General Counsel. Any employee, officer or director who becomes aware of a
conflict or potential conflict should bring it to the attention of a
supervisor, manager or other appropriate personnel or consult the procedures
described in Section 14 of this Code.
3. Insider Trading
Employees who have
access to confidential information are not permitted to use or share that
information for stock trading purposes or for any other purpose except the
conduct of the Company’s business. All non-public information about the
Company should be considered confidential information. To use non-public
information for personal financial benefit or to "tip" others who
might make an investment decision to buy or sell Company stock on the basis
of this information is not only unethical but also illegal. If you have any
questions concerning this, please consult the Company’s Policy on Insider
Trading or the Company’s Chief Financial Officer or General Counsel.
and directors are prohibited from taking for themselves personally
opportunities that are discovered through the use of corporate property,
information or position without the consent of the Board of Directors. No
employee may use corporate property, information, or position for improper
personal gain, and no employee may compete with the Company directly or
indirectly. Employees, officers and directors owe a duty to the Company to
advance its legitimate interests when the opportunity to do so arises.
5. Competition and
We seek to outperform
our competition fairly and honestly. We seek competitive advantages through
superior performance, never through unethical or illegal business practices.
Stealing proprietary information, possessing trade secret information that
was obtained without the owner’s consent, or inducing such disclosures by
past or present employees of other companies is prohibited. We should
endeavor to respect the rights of and deal fairly with the Company’s
customers, suppliers, competitors and their employees. No employee, officer
or director should take unfair advantage of anyone through manipulation,
concealment, abuse of privileged information, misrepresentation of material
facts, or any other intentional unfair-dealing practice.
To maintain the
Company’s valuable reputation, compliance with our quality processes and
safety requirements is essential. In the context of ethics, quality requires
that our production and services be designed to meet our obligations. All
operations must be conducted in accordance with all applicable regulations.
Compliance with all regulations and laws of governing or regulatory agencies
should be given priority over the opportunity to profit or gain competitive
The purpose of
business entertainment and gifts in a commercial setting is to create good
will and sound working relationships, not to gain unfair advantage with
suppliers and customers. No gift or entertainment should ever be offered,
given, provided or accepted by any Company employee, family member of an
employee or agent unless it: (1) is not a cash gift, (2) is consistent with
customary business practices, (3) is not excessive in value, (4) cannot be
construed as a bribe or payoff and (5) does not violate any laws or
regulations. Please discuss with your supervisor any gifts or proposed gifts
that you are not certain are appropriate.
The diversity of the
Company’s employees is a tremendous asset. We are firmly committed to
providing equal opportunity in all aspects of employment and will not
tolerate any illegal discrimination or harassment of any kind. Examples
include derogatory comments based on racial or ethnic characteristics and
unwelcome sexual advances.
7. Health and Safety
The Company strives to provide each employee with a safe and
healthful work environment. Each employee has responsibility for maintaining
a safe and healthy workplace for all employees by following safety and health
rules and practices and reporting accidents, injuries and unsafe equipment,
practices or conditions.
Violence and threatening
behavior are not permitted. Employees should report to work in condition to
perform their duties, free from the influence of illegal drugs or alcohol.
The use of illegal drugs or alcohol in the workplace will not be tolerated.
The Company requires
honest and accurate recording and reporting of information in order to make
responsible business decisions.
All of the Company’s
books, records, accounts and financial statements must be maintained in
reasonable detail, must appropriately reflect the Company’s transactions and
must conform both to applicable legal requirements and to the Company’s
system of internal controls. Unrecorded or "off the books" funds or
assets should not be maintained.
Business records and
communications often become public, and we should avoid exaggeration,
derogatory remarks, guesswork, or inappropriate characterizations of people
and companies that can be misunderstood. This applies equally to e-mail,
internal memos, and formal reports. Records should always be retained or
destroyed according to the Company’s record retention policies. In accordance
with those policies, in the event of litigation or governmental
investigation, please consult the Company’s General Counsel.
and directors must maintain the confidentiality of confidential information
entrusted to them by the Company or its suppliers and customers, except when
disclosure is explicitly authorized or required by laws or regulations or
approved by senior management. Confidential information includes all
non-public information that might be of use to competitors, or harmful to the
Company or its customers, if disclosed. It also includes information that
suppliers and customers have entrusted to us. The obligation to preserve
confidential information continues even after employment ends.
10. Protection and Proper Use of Company Assets
All employees, officers and directors should endeavor to protect
the Company’s assets and ensure their efficient use. Theft, carelessness, and
waste have a direct impact on the Company’s profitability. Any suspected
incident of fraud or theft should be immediately reported for investigation.
Company equipment should not be used for non-Company business, though
incidental personal use may be permitted.
The obligation of
employees, officers and directors to protect the Company’s assets includes
its proprietary information. Proprietary information includes intellectual
property such as seismic data or information, well data, trade secrets,
patents, trademarks, and copyrights, as well as business, marketing and
service plans, geological prospects and interpretations, engineering,
geological, geophysical and manufacturing ideas, designs, databases, records,
salary information and any unpublished financial data and reports.
Unauthorized use or distribution of this information would violate Company
policy. It could also be illegal and result in civil or even criminal
11. Payments to
The U.S. Foreign
Corrupt Practices Act prohibits giving anything of value, directly or
indirectly, to officials of foreign governments or foreign political
candidates in order to obtain or retain business. It is strictly prohibited
to make illegal payments to government officials of any country.
In addition, the U.S.
government has a number of laws and regulations regarding business gratuities
that may be accepted by U.S. government personnel. The promise, offer or
delivery to an official or employee of the U.S. government of a gift, favor
or other gratuity in violation of these rules would not only violate Company
policy but could also be a criminal offense. State and local governments, as
well as foreign governments, may have similar rules. The Company’s General
Counsel can provide guidance to you in this area.
12. Waivers of the
Code of Business Conduct and Ethics
Any waiver of this
Code for officers, directors, employees or consultants may be made only by
the Board or the Governance and Nominating Committee of the Board and will be
promptly disclosed if and as required by law or stock exchange regulation.
13. Reporting Any
Illegal or Unethical Behavior
encouraged to talk to supervisors, managers or other appropriate personnel
about observed illegal or unethical behavior and when in doubt about the best
course of action in a particular situation. It is the policy of the Company
not to allow retaliation for reports of misconduct by others made in good
faith by employees. Employees are expected to cooperate in internal
investigations of misconduct.
We must all work to
ensure prompt and consistent action against violations of this Code. However,
in some situations it is difficult to know right from wrong. Since we cannot
anticipate every situation that will arise, it is important that we have a
way to approach a new question or problem. These are the steps to keep in
- Make sure you have all the facts. In order to reach the right solutions, we must be as
fully informed as possible.
- Ask yourself: What specifically am I being asked to
do? Does it seem unethical or improper? This will enable you to focus on the specific question
you are faced with, and the alternatives you have. Use your judgment and
common sense; if something seems unethical or improper, it probably is.
- Clarify your responsibility and role. In most situations, there is shared responsibility.
Are your colleagues informed? It may help to get others involved and
discuss the problem.
- Discuss the problem with your supervisor. This is the basic guidance for all situations. In
many cases, your supervisor will be more knowledgeable about the
question and will appreciate being brought into the decision-making
process. Remember that it is your supervisor’s responsibility to help
- Seek help from Company resources. In the rare case where it may not be appropriate to
discuss an issue with your supervisor, or where you do not feel
comfortable approaching your supervisor with your question, discuss it
with senior management, corporate counsel or the Human Resources
- You may report ethical violations in confidence and
without fear of retaliation.
If your situation requires that your identity be kept secret, your
anonymity will be protected. The Company does not permit retaliation of
any kind against employees for good faith reports of ethical violations.
- Always ask first, act later: If you are unsure of what to do in any situation,
seek guidance before you act.
15. Financial and
Accounting Officers and Managers
Accounting Officers and Managers hold an important and elevated role in
corporate governance. As part of the Corporate Leadership Team, Financial and
Accounting Officers and Managers are vested with both the responsibility and
authority to protect, balance, and preserve the interests of all of the
Company’s stakeholders, including shareholders, clients, employees,
suppliers, and citizens of the communities in which business is conducted.
Financial and Accounting Officers and Managers fulfill this responsibility by
prescribing and enforcing the policies and procedures employed in the
operation of the Company’s financial organization, and by demonstrating the
Accounting Officers and Managers will exhibit and promote the highest
standards of honest and ethical conduct through the establishment and
operation of policies and procedures that:
- Encourage professional integrity in all aspects of
the financial organization, by eliminating inhibitions and barriers to
responsible behavior, such as coercion, fear of reprisal, or alienation
from the financial organization or the enterprise itself.
- Prohibit and eliminate the occurrence of conflicts
between what is in the best interest of the enterprise and what could
result in material personal gain for a member of the financial
organization, including Financial and Accounting Officers and Managers.
- Provide a mechanism for members of the finance
organization to inform senior management of deviations in practice from
policies and procedures governing honest and ethical behavior.
Accounting Officers and Managers will establish and manage the enterprise
transaction and reporting systems and procedures to ensure that:
- Business transactions are properly authorized and
completely and accurately recorded on the Company’s books and records in
accordance with Generally Accepted Accounting Principles (GAAP) and
established company financial policy.
- The retention or proper disposal of Company records
shall be in accordance with applicable legal and regulatory
- Periodic financial communications and reports will be
delivered in a manner that facilitates a high degree of clarity of
content and meaning so that readers and users can determine their
significance and consequence.
Last modified May 2007