8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

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

February 14, 2012

Date of Report (Date of earliest event reported)

ABRAXAS PETROLEUM CORPORATION

(Exact name of registrant as specified in its charter)

Nevada	1-16071	74-2584033
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

18803 Meisner Drive

San Antonio, Texas 78258

(210) 490-4788

(Address of principal executive offices and Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

  o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

  o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

  o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

  o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01                      Entry into a Material Definitive Agreement.

On February 14, 2012, Raven Drilling, LLC, a wholly-owned subsidiary of Abraxas Petroleum, finalized the note with respect to the rig loan agreement dated September 19, 2011 with RBS Asset Finance, Inc., as lender.  The principal amount of the note is $7.0 million and will bear interest at 4.26%, which equates to the four-year interest swap rate plus 3.50% on the date of closing.  Interest only is due for the first 18-months of the note and will amortize in full over the remaining life of the note.  Interest and principal, when required, is payable monthly.  Subject to earlier prepayment provisions and events of default, the stated maturity date of the note is February 14, 2017.  The proceeds were used to re-finance the purchase and refurbishment of the Oilwell 2000 hp diesel electric drilling rig (the “Collateral”) that the Company purchased in July 2011.  The rig will begin deployment to McKenzie County, North Dakota in the Williston Basin to drill Bakken / Three Forks wells in the very near future.

Abraxas Petroleum has guaranteed Raven Drilling’s obligations under the rig loan agreement.  Obligations under the rig loan agreement are secured by a first priority perfected security interest, subject to certain permitted encumbrances, in the Collateral.

The full text of the subject note is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated into this Item 1.01 by reference.

Item 2.03                      Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

To the extent required by Item 2.03 of Form 8-K, the information set forth under Item 1.01 above hereby is incorporated into this Item 2.03 by reference.

Item 9.01                      Financial Statements and Exhibits.

(d) Exhibits

Number                  Description

10.1 Note dated as of February 14, 2012 between Raven Drilling, LLC, as Borrower, and RBS Asset Finance, Inc., as Lender.

Pursuant to the requirements 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/ Barbara M. Stuckey                                                                     

Barbara M. Stuckey

Vice President, Chief Financial

Officer and Assistant Secretary

Dated:  February 16, 2012

EX-10.1

EXHIBIT 10.1

NOTE

$7,000,000.00 February 14, 2012

FOR VALUE RECEIVED, the undersigned, RAVEN DRILLING, LLC (“Borrower”), unconditionally promises to pay to the order of RBS ASSET FINANCE, INC. (“Lender”) the principal sum of Seven Million and 00/100 DOLLARS ($7,000,000.00), which is the Original Principal Amount of the Loan made by Lender on the date hereof pursuant to that certain Loan Agreement dated as of September 19, 2011 (together with any and all amendments or supplements thereto, the “Loan Agreement”) between Borrower and Lender.  Borrower shall make payments of interest only from the date of this Note until September 1, 2013.  Principal shall be payable on each Payment Date beginning October 1, 2013 in installments as set forth on Schedule A hereto, with a final installment (in the amount necessary to pay in full this Note) due and payable on March 1, 2017, which is the Stated Maturity Date for this Note and the related Loan, or earlier upon acceleration pursuant to the Loan Agreement.  Borrower also promises to pay interest on the unpaid principal amount hereof from the date hereof, which is the Closing Date for this Note and the related Loan, until maturity (whether by acceleration or otherwise) and, after maturity, until paid.  Except as otherwise provided in the Loan Agreement, interest shall accrue on this Note at a rate per annum equal to 4.5883% and shall be payable on each Payment Date.

Payments of both principal and interest are to be made without set-off or counterclaim in lawful money of the United States of America in same day or immediately available funds to the account designated by Lender pursuant to the Loan Agreement.

Borrower may prepay this Note only in accordance with the terms of the Loan Agreement, and in connection with any such prepayment, however, no prepayment shall occur prior to the first anniversary of the Closing Date, Borrower shall pay to Lender a Prepayment Fee equal to the sum of 3% of the amount prepaid if prepayment is after the first anniversary of the Closing Date of this Note but on or prior to the second anniversary of the Closing Date for this Note, 2% of the amount prepaid if prepayment is after the second anniversary of the Closing Date of this Note but on or prior to the third anniversary, 1% of the amount prepaid if prepayment is after the third anniversary of the Closing Date of this Note but on or prior to the fourth anniversary and 0% thereafter.

This Note evidences Indebtedness incurred under the Loan Agreement and is secured by the Collateral described in the Loan Agreement, including, without limitation, the Collateral described on the Collateral Schedule referencing this Note.  This Note is subject to the terms and conditions set forth in the Loan Agreement.  Capitalized terms used herein but not defined herein shall have the meanings ascribed to such terms in the Loan Agreement.

Borrower hereby irrevocably authorizes Lender to make (or cause to be made) appropriate notations on the Schedule A attached to this Note (or on any continuation of or supplements to such schedule), which notations, if made, shall evidence, inter alia, the date of, the outstanding principal of, and the interest rate applicable to, the Loan evidenced hereby.  Such notations shall be, absent manifest error, evidence of the information so set forth therein; provided, however, that the failure of Lender to make any such notations shall not limit or otherwise affect any Obligations of Borrower.

All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor.

THIS NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.

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IN WITNESS WHEREOF, Borrower has caused this Note to be executed by its officer and duly authorized as of the day and year first above written.

BORROWER:

RAVEN DRILLING, LLC

By __________________                                                                      

Name ________________                                                                      

Title _________________