UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION



                             Washington, D.C. 20549



                                   F O R M 8-K

                                 CURRENT REPORT

                       Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934



                                 Date of Report
                                January 24, 2003


                          Abraxas Petroleum Corporation
             (Exact name of registrant as specified in its charter)


                                     Nevada
                 (State of other jurisdiction of incorporation)





0-19118                                                      74-2584033
(Commission File Number)                (I.R.S. Employer Identification Number)




                        500 N. Loop 1604 East, Suite 100
                            San Antonio, Texas 78232
                    (Address of principal executive offices)

                         Registrant's telephone number,
                              including area code:
                                  210-490-4788







Item 5.OTHER EVENTS

See attached Press Release



The following exhibits are filed as part of this report:

NUMBER                                              DOCUMENT

99.1                                 Press release dated January 24, 2003




                                   SIGNATURES


     Pursuant to the  requirement  of the  Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.

                          ABRAXAS PETROLEUM CORPORATION



                          By:__/s/Chris Williford__________
                             Chris Williford
                             Executive Vice President, Chief Financial
                             Officer and Treasurer


Dated:    January 24, 2003




                                                                   Exhibit 99.1

                                  NEWS RELEASE

                ABRAXAS ANNOUNCES CLOSING OF CANADIAN ASSET SALE,
                       NEW SENIOR SECURED CREDIT FACILITY,
             AND COMPLETION OF EXCHANGE OFFER AND REDEMPTION OF DEBT

     SAN  ANTONIO,  TX  (January  24,  2003)  -  Abraxas  Petroleum  Corporation
("Abraxas")  (AMEX:ABP)  and its wholly  owned  subsidiaries,  Canadian  Abraxas
Petroleum  Limited  ("Canadian  Abraxas") and Grey Wolf  Exploration Inc. ("Grey
Wolf") today announced the following transactions:

    o    The  closing of the sale of the capital  stock of Canadian  Abraxas and
         Grey Wolf to a Canadian royalty trust for  approximately  $138 million.
         The sale of  Canadian  Abraxas  and Grey  Wolf  represents  the sale of
         approximately  60  Bcfe of net  proved  reserves  and  4,500  Boepd  of
         production at a purchase price of approximately $2.30 per Mcfe and over
         $30,000  per  Boepd.  Significant  assets  remain in Canada and will be
         operated under a new wholly-owned  Canadian  subsidiary,  retaining the
         name Grey Wolf Exploration Inc.

    o    The closing of a new senior  secured  credit  facility  consisting of a
         term loan facility of $4.2 million and a revolving  credit  facility of
         up to $50 million with an initial  borrowing base of $45.5 million,  of
         which $42.5 million was used to fund the exchange offer described below
         and $3.0  million  of which  will be  available  to fund the  continued
         development of our existing crude oil and natural gas properties.

    o    The closing of Abraxas' exchange offer,  pursuant to which Abraxas will
         pay  $264 in cash,  and  issue  $610  principal  amount  of new 11 1/2%
         Secured  Notes due 2007,  Series A, and  approximately  31.36 shares of
         Abraxas  common  stock  for each  $1,000  in  principal  amount  of the
         outstanding  11 1/2% Senior  Secured  Notes due 2004,  Series A, and 11
         1/2% Senior  Notes due 2004,  Series D, issued by Abraxas and  Canadian
         Abraxas,  which were  tendered and accepted in the exchange  offer.  An
         aggregate of  approximately  $180  million in  principal  amount of the
         notes were tendered in the exchange  offer and the remaining  notes not
         tendered were discharged.

    o    The repayment  and discharge of Abraxas' 12?% Senior  Secured Notes due
         2003,  principal  amount of $63.5  million,  out of the proceeds of the
         transactions described above.

    o    The repayment of Grey Wolf's senior secured credit facility with Mirant
         Canada  Energy  Capital  Ltd.  in the  amount  of  approximately  $46.3
         million.

         These  transactions  reduced the Company's total proved reserves (as of
December 31, 2001) by 36%, reduced our long-term debt (pro forma as of September
30,  2002)  by 45% and  reduced  our  cash  interest  expense  (pro  forma as of
September 30, 2002) by 90%.

         The notes and shares of Abraxas  common  stock  issued in the  exchange
offer have not been registered under the Securities Act of 1933, as amended (the
"Securities  Act"),  and may not be offered or sold in the United States without
registration  under  the  Securities  Act  or  pursuant  to  an  exemption  from
registration.







         CIBC World  Markets  and BMO Nesbitt  Burns acted as co-lead  financial
advisors to the Company in connection with the sale of Canadian assets.

         Jefferies & Company, Inc. acted as dealer manager of the exchange offer
and Mellon Investor  Services,  LLC acted as information  agent for the exchange
offer.

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

         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  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:
Janice Herndon/Manager Corp. Communications
Telephone 210.490.4788
jherndon@abraxaspetroleum.com
www.abraxaspetroleum.com