Exhibit 99.1


                                  NEWS RELEASE

     Abraxas Announces 2005 Capital Budget and Guidance for U.S. Operations

SAN ANTONIO (Jan. 31, 2005) - Abraxas  Petroleum  Corporation  (AMEX:ABP)  today
announced a U.S.  capital  expenditure  budget of $22  million for 2005,  issued
guidance for the year and provided an update for certain operational  activities
in the U.S.

Due to the  previously  announced  initial  public  offering  in  Canada  by our
wholly-owned subsidiary,  Grey Wolf Exploration Inc., this news release contains
information regarding U.S. properties only.

In 2005, the U.S. budget  contemplates  the drilling of 16 wells, of which three
are in South  Texas,  one in Wyoming and 12 in West Texas.  All of the wells are
development in nature and on existing leasehold.

As a result of 2004 financial  estimates and current market conditions,  Abraxas
issued U.S. operating and financial guidance for 2005 as follows:

           Production:
                Bcfe                               6.5 - 7.5
                Exit Rate (Mmcfe/d)                  19 - 21
           Price Differentials:
                Gas ($/Mcf)                             0.55
                Oil ($/Bbl)                             0.75
           Lease Operating Expenses ($/Mcfe)            0.85
           G&A ($/Mcfe)                                 0.55
           D/D/A ($/Mcfe)                               1.25
           Capital Expenditures ($ millions)            22.0

Operationally,  in the U.S., we have  completed  drilling on one 100% WI well in
South  Texas  and have  begun  completion  operations.  While  the  Company  has
experienced delays in obtaining rigs, we are currently drilling one 100% WI well
in South Texas and one 100% WI well in West Texas.  In  addition,  three 100% WI
wells in West Texas are anticipated to spud in February.

"Even though we find ourselves in a tightening environment in terms of available
rigs and related  services,  we are optimistic about our ability to dramatically
increase  our  capital  expenditures  on U.S.  projects  in 2005.  Our  expected
drilling  program  of $22  million,  a  greater  than  two-fold  increase  above
indenture  constrained  2004  spending  levels,  is  comprised  of 16  different
projects. As these projects are successfully  completed, we anticipate a growing
production profile in line with our guidance",  commented Bob Watson,  President
and CEO.

Abraxas Petroleum  Corporation is a San Antonio-based  crude oil and natural gas
exploitation and production company.  The Company operates in Texas, Wyoming and
western Canada.







Safe Harbor for forward-looking  statements:  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.

FOR MORE INFORMATION CONTACT:
Barbara M. Stuckey/Director of Corporate Development
Direct Telephone 210.757.9835
Main Telephone 210.490.4788
bstuckey@abraxaspetroleum.com
www.abraxaspetroleum.com