Abraxas Petroleum Corporation Announces Increased Production and Ownership and Successful Well Results in Core Areas in Canada.

Business Editors & Energy Writers

SAN ANTONIO--(BUSINESS WIRE)--Sept. 27, 2000

Abraxas Petroleum Corporation (AMEX:ABP) announced increased natural gas production and development drilling site ownership in the Sundre field through a property swap at its 49%-owned subsidiary, Grey Wolf Exploration (TO:GWX).

Grey Wolf signed a definitive agreement to swap certain of its assets and $0.3 million cash for long-life natural gas producing properties and undeveloped land in the Company's core area of Sundre, Alberta. In addition, successful drilling continues in Pouce Coupe and Doris areas of Alberta.

The prospects for continued increases in natural gas production in Sundre and Pouce Coupe fields over the near term are very bright and the market and infrastructure including gas plants and gathering systems are already in place. The Company also was successful at a recent crown lease sale in acquiring additional acreage in its core areas offsetting current development activities.

Current working interest production in Sundre increases from 4.0 mmcfpd to 7.2 mmcfpd plus associated natural gas liquids. The swap in Sundre gives Abraxas and Grey Wolf 100% ownership in the gas plant, gathering system, 25 producing wells, 45,000 gross acres and over 30 workover and development locations. The 20 mmcfpd gas plant has excess capacity of approximately 10 mmcfpd and could be repermitted to add an additional 15 mmcfpd of capacity at modest cost. The Company has already commenced a drilling and workover program to utilize this excess capacity in the near term. The swap transaction is expected to close in mid-October subject to a number of normal due diligence conditions, including resolving rights of first refusal on certain lands in the package.

At Pouce Coupe, the Company tested a development well at 2.2 mmcfpd plus associated liquids that offsets a previously announced well that was put on production earlier this year and currently is producing 3 mmcfpd. The Company and Grey Wolf own approximately 55% working interest in these wells. The Company anticipates additional development drilling in the near future.

In the Doris area, a new development well was recently placed on production at the rate of 1.5 mmcfpd. The Company owns a 66% working interest in this well.

For additional information about the Company, please visit our Web site, www.abraxaspetroleum.com for the most current and updated information. The Web site is updated daily in order to comply with the SEC Regulation FD (Fair Disclosure) which was recently passed. The Regulation seeks to end unfair advance communication of market-moving information between corporations and Wall Street analysts before the public at large has access to the same data.

Abraxas Petroleum Corporation is a San Antonio-based crude oil and natural gas exploration and production company that also processes natural gas. It operates in Texas, Kansas, Wyoming and western Canada.

Safe Harbor for forward-looking statement: Statements in this release looking forward in time involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to be materially different from any future performance suggested in this release. Such factors may include, but may not be necessarily limited to, changes in the prices received by the Company for crude oil and natural gas. In addition, the Company's future crude oil and natural gas production is highly dependent upon the Company's level of success in acquiring or finding additional reserves. Further, the Company operates in an industry sector where securities values are highly volatile and may be influenced by economic and other factors beyond the Company's control. In the context of forward-looking information provided for in this release, reference is made to the discussion of risk factors detailed in the Company's filing with the Securities and Exchange Commission during the past 12 months.