Abraxas in $140 Million Land Acquisition Deal

Abraxas Petroleum's wholly-owned subsidiary of Abraxas Energy Partners, L.P. has signed a definitive agreement to acquire oil and gas properties for $140 million from St. Mary Land & Exploration Company. The acquisition is subject to customary closing conditions and purchase price adjustments and is expected to close during the first quarter of 2008.

The properties are primarily located in the Rockies and Mid-Continent regions of the United States, and include:

--Approximately 1,500 wells

--Estimated proved reserves as of December 1, 2007 (based on recent strip prices) of approximately 10,250 MBOE

--82 percent proved developed producing reserves

--52 percent oil

--Reserves-to-production ratio of approximately 14 years

--Approximately 2,050 Boepd of current daily net production

Abraxas Energy currently intends to initially finance the acquisition with borrowings under an amended credit facility together with borrowings under a new bridge facility and is currently in discussions with Société Générale to arrange such financing. Abraxas Energy has delayed its initial public offering due to the effect of this acquisition on the required disclosure for its registration statement.

Abraxas Petroleum anticipates purchasing a portion (less than 10% of the estimated proved reserves) of the acquired properties. These properties are more exploratory in nature and not deemed suitable for Abraxas Energy. Abraxas Petroleum currently intends to fund this portion of the acquisition from cash on hand.

In connection with this acquisition, Abraxas Energy has entered into options to purchase NYMEX-based fixed price swaps on a significant portion of the estimated production from the acquired properties' current proved developed producing reserves for the period February 2008 through December 2011.

"We are quite pleased to announce Abraxas Energy's first acquisition since its formation. As a result of the acquisition, our percentage of proved developed producing reserves, percentage of oil production, and our R/P ratio will increase significantly and complement our existing asset base with a more diverse, stable long-lived production profile. We expect the acquisition to be immediately accretive to distributable cash flow per unit," commented Bob Watson, President and CEO.


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