NEWS RELEASE
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FOR IMMEDIATE RELEASE                               www.abraxaspetroleum.com

FOR MORE INFORMATION CONTACT:
JACK M. RONEY
DIRECTOR OF CORPORATE DEVELOPMENT

                     ABRAXAS PETROLEUM CORPORATION ANNOUNCES
                  PRICING OF $60 MILLION SENIOR NOTES OFFERING

SAN ANTONIO,  TX - (January 21, 1998) - Abraxas Petroleum  Corporation  (NASDAQ:
AXAS)  announced  today that it has  priced a private  offering  of $60  million
principal  amount of 11.5%  Senior  Notes  due 2004,  Series C, an Add-On to the
Company's  existing $215 million Series B Notes.  The notes bear a stated coupon
rate of  11.5%,  but were  priced  at  approximately  106.75%  of par to yield a
minimum "yield to worst" of 9.69%. Canadian Abraxas Petroleum Limited,  Abraxas'
Canadian subsidiary, is a co-issuer of the notes.

The net proceeds  will be used to re-pay bank debt which was incurred  primarily
for corporate  acquisitions  and to fund a portion of the Company's 1998 capital
expenditure  budget.  The new notes are being issued pursuant to an underwritten
Rule 144A offering.  The notes have not been registered under the Securities Act
of 1933.

Moody's  Investor  Services and Standard & Poor's  confirmed  ratings of B-2 and
Single-B, respectively, for both the $60 million proposed issue and the existing
$215 million notes. Closing is expected to occur on January 27, 1998.

Abraxas Petroleum  Corporation is a San Antonio-based  crude oil and natural gas
exploration and production  company that also processes natural gas. It operates
primarily  along the Texas Gulf Coast,  in the Permian  Basin of western  Texas,
western Canada and southwestern Wyoming.

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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.