Exhibit 10.17



    ABRAXAS PETROLEUM CORPORATION SENIOR MANAGEMENT INCENTIVE BONUS PLAN 2006

     Base salaries for senior  management  of the Company are not  structured to
reflect outstanding individual  performance,  but are only reflective of average
salaries  in  peer   companies.   The  Company   believes  that  unusually  good
performances,  particularly  performances  that enhance  stockholder value in an
above average manner, should be awarded accordingly.



Participants

     President,  Executive Vice Presidents and Vice  Presidents  involved in the
geological  and  drilling  and  development   activities  of  Abraxas  Petroleum
Corporation

Purpose

     To create  financial  incentives  for senior  management  tied  directly to
increases in net asset value per share as defined below.

Net Asset Value Per Share

         Calculated as Follows:

         + Proved Reserves SEC PV10 (1)
         + Probable Reserves SEC PV10 (1)
         + Property and equipment, including acreage (2)
         + Other Assets
         +/- Working Capital (3)
         -  Less Debt
         = Net Asset Value

         / Shares Outstanding at Year End

         = Net Asset Value Per Share

Notes:

     (1) As determined by a consulting engineering firm, SEC PV10; year-end PV10
         values will use the same price deck  (including any  differentials)  as
         the previous year to which it is being compared.
     (2) Excludes proved reserves covered by (1) above and excludes DD&A.
     (3) Current assets minus current liabilities without hedge affect

         All  values as  reflected  on books of the  Company  except as noted in
footnotes.

Bonus Awards

         Yearly bonuses will be the  percentage  increase in net asset value per
share over the  previous  year's  net asset  value per share up to the first 10%
increase and twice the  percentage  thereafter  with a maximum award for any one
year of 70% of annual salary.

Payment of Bonus

         Bonuses  will be  calculated  as soon as possible  after the end of the
fiscal year,  generally as soon as the audit and reserve  report are  available.
Bonuses  will  normally  be paid  during  the second  quarter  of each  year.  A
participant  must be  employed by the Company on the day the bonus is paid to be
eligible to receive any part or all of the bonus. The Company reserves the right
to  defer  all or any  part of any  bonus to  future  years  in  which  case the
recipient  must be an employee  on the  deferment  date to receive the  deferred
bonus. In addition,  the Company reserves the right to pay all or any portion of
any bonus,  or any  deferred  bonus,  in shares of  Company  Common  Stock.  THE
ULTIMATE  AWARD  OF ANY  BONUS,  EVEN IF GOALS  ARE  ATTAINED,  IS THE  COMPLETE
DISCRETION OF THE BOARD OF DIRECTORS