Abraxas Petroleum Corporation Announces Initial Production At 13.5 MMCFPD From Montoya Horizontal Drilling Project.

Business Editors & Energy Writers

SAN ANTONIO--(BUSINESS WIRE)--Dec. 20, 2000

Abraxas Petroleum Corporation (AMEX:ABP) announced today initial results from the Caprito 99-9H well in the ROC (Montoya) Field, Ward County, Texas.

The horizontal well, operated by EOG Resources Inc. (NYSE:EOG), was drilled to a total depth of 17,737 feet and is currently producing at a rate of 13.5 million cubic feet per day of natural gas from the Montoya formation and is cleaning up after an acid frac treatment. Abraxas currently has a 25% working interest in the Caprito 99-9H.

A second well in the same play, the Caprito 82-1H, is drilling towards a total depth of 18,000 feet to also test the Montoya formation. Earlier this year Abraxas announced a joint participation agreement with EOG whereby EOG agreed to drill up to five wells with Abraxas having a carried interest. The Company and EOG plan to drill several additional wells during 2001 on Abraxas acreage. Abraxas believes there could be up to eighteen additional locations on its acreage.

The Company is continuing its previously announced drilling activities in both Wyoming and Canada. One well is currently drilling and two wells are in the completion process in the Company's Powder River Basin play in Wyoming. In the Company's core areas of Caroline (Sundre) and Pouce Coupe in Alberta, Canada, three wells are currently drilling and three wells are being completed. An expansion and upgrade of the gas plant and gathering facilities in these areas are underway, which will result in increased production in the first quarter 2001. 3D seismic surveys are ongoing in all three areas and should be completed in the first quarter 2001. Recent cold weather has caused some delay in these operations; however, the Company feels this will not have any long-term impact on these projects.

The Company also announced that it has exercised its right under its Contingent Value Rights Agreement to extend the maturity date to May 21, 2001, from the original maturity date of Dec. 21, 2000.

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).

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, 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 the value of securities is 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.