Abraxas Reports Improved Second Quarter Financial Results and Operational Update

Business Wire, August 13, 2001

(b) YTD 6/30/2001, excludes current liability related to hedge

accounting of $5.3 million less related deferred tax asset of $1.0

million

(c) YTD 6/30/2001 includes an Other Comprehensive Income net charge of

($6.0) million related to hedge accounting adopted in 2001.

            Abraxas Petroleum Corporation and Subsidiaries
                 Consolidated Statements of Operations
                              (Unaudited)

                            Three Months Ended    Six Months Ended
                                 June 30,            June 30,
                              2001      2000       2001      2000
                           --------- ---------  --------- ---------
                              (In thousands except per share data)
Revenue:
 Oil and gas production
  revenues                 $  20,127 $  15,501  $  48,376 $  31,127
 Gas processing revenues         498       645        934     1,402
 Rig revenues                    225       119        408       250
 Other                           266        22        484       225
                           --------- ---------  --------- ---------
                              21,116    16,287     50,202    33,004

Operating costs and expenses:
 Lease operating and
  production taxes             4,332     4,301      9,191     8,930
 Depreciation, depletion,
  and amortization             8,288     8,518     17,129    17,466
 Rig operations                  191       196        344       384
 General and administrative    1,575     1,643      3,684     3,082
 General and administrative
 (Stock-based compensation)   (2,332)       --     (1,401)       --
                           --------- ---------  --------- ---------
                              12,054    14,658     28,947    29,862
                           --------- ---------  --------- ---------
Operating income               9,062     1,629     21,255     3,142

Other (income) expense:
 Interest income                 (12)     (267)       (28)     (327)
 Amortization of deferred
  financing fee                  455       508        910     1,015
 Interest expense              7,829     7,892     15,610    15,665
 Gain on sale of equity
  investment                      --        --         --   (33,983)
 Other expense                    --        --         16       436
                           --------- ---------  --------- ---------
                               8,272     8,133     16,508   (17,194)
                           --------- ---------  --------- ---------

Net income (loss) from
 operations before taxes
 and extraordinary item          790    (6,504)     4,747    20,336

Income tax expense
 (benefit)                     1,509        31      4,285      (296)

Minority interest in income
 of consolidated foreign
 subsidiary                      555       204      1,481       215
                           --------- ---------  --------- ---------
Net income (loss) before
 extraordinary item           (1,274)   (6,739)    (1,019)   20,417

Extraordinary item:
 Debt extinguishment and
  restructure                     --     1,326         --     1,326
                           --------- ---------  --------- ---------
Net income (loss)          $  (1,274)$  (5,413) $  (1,019)$  21,743
                           ========= =========  ========= =========

Earnings (loss) per common
  share:
 Net Income (loss) before
  extraordinary item       $   (0.05)$   (0.30) $   (0.04)$    0.90
 Extraordinary item               --      0.06         --      0.06
                           --------- ---------  --------- ---------
Net income (loss) per
 common share              $   (0.05)$   (0.24) $   (0.04)$    0.96
                           ========= =========  ========= =========

Earnings (loss) per common
  share assuming dilution:
 Net Income (loss) before
  extraordinary item       $   (0.05)$   (0.30) $   (0.04)$    0.43
 Extraordinary item               --      0.06         --      0.03
                           --------- ---------  --------- ---------
Net income (loss) per
 common share              $   (0.05)$   (0.24) $   (0.04)$    0.46
                           ========= =========  ========= =========