Abraxas Petroleum Corporation provides the following operational update.

Rocky Mountain In Converse County, Wyoming, the Peregrine 5H was drilled to a total measured depth of 11,500', including a 3,300' lateral in the Turner formation. This well was completed with a 10-stage fracture stimulation and placed on pump approximately a month ago. During the first 30 days of production, the well produced approximately 3,500 barrels of oil and associated natural gas (approximately 115 barrels of oil per day). A gas plant is currently being installed to reduce the volume of natural gas being flared from this well and the Lakeside 1H by condensing the heavier hydrocarbons out of the gas stream and selling them alongside the oil. Abraxas owns a 100% working interest in this well.

In Divide County, North Dakota, a non-operated well targeting the Three Forks (Bakken) formation was drilled to a total measured depth of 16,200', including a 7,000' lateral, after sidetracking the original lateral due to a stuck drill pipe. It is anticipated that this well will be completed with a 20-stage fracture stimulation in the near future. Abraxas owns a 10% working interest in this well.

In Sheridan County, Montana, the State 2-16 Red River test was a dry hole and has been plugged and abandoned. Abraxas owns a 100% working interest in this well.

Permian Basin In Nolan County, Texas, the Spires Ranch 202-1 was drilled to a total depth of 7,300' to test the Ellenburger, Strawn and Caddo formations. After testing oil from the Ellenburger formation, the well is currently shut-in for a 30-day pressure build-up to gather more information which will be utilized to design a potential stimulation. Abraxas owns a 100% working interest in this well.

Gulf Coast In San Patricio County, Texas, we anticipate drilling two new vertical oil wells in our Portilla field during the first quarter of 2010 to the base of the Frio formation at approximately 9,000'. Abraxas owns a 100% working interest in each of these wells.

In Bee County, Texas, we anticipate drilling a vertical gas well during the first quarter of 2010 to the Luling formation at approximately 10,000'. Abraxas owns a 20% working interest in this well before casing point and a 40% working interest after casing point.

"We are pleased with the production rates from the Peregrine 5H considering this well was a re-entry of an existing wellbore with significantly lower capital costs than a new drill. We oriented the lateral to maximize the intersection of natural fractures based on our interpretation of the 3-D seismic as we did with the previously drilled Lakeside 1H. We have identified approximately 14 additional locations on our 3-D and held-by-production leasehold with similar natural fractures. The State 2-16 was our first dry hole in three years and even though the well costs were approximately $1.0 million, we do not relish reporting a dry hole; however, they are an accepted part of our business and the risks associated with it," commented Bob Watson, Abraxas' President and CEO.

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