WEST TEXAS

Abraxas' operations in West Texas are concentrated in two major areas:

Delaware Basin (Ward, Reeves and Pecos Counties)

Eastern Shelf (Scurry, Mitchell and Coke Counties)

Abraxas' leasehold in the Delaware Basin (Ward County) consists of multiple deep gas fields and productive formations, characterized by complex fault and fracturing systems. The three most prolific formations are the vertically stacked Devonian (~ 13,000'), Montoya (~ 14,000') and Ellenburger (~ 16,000'). These deep gas fields were first discovered in the 1970's and initially produced from the more prolific Devonian and Ellenburger formations; however, during the late 1990's, successful horizontal drilling into the relatively tight Montoya formation renewed industry interest in this area. The fields have produced over 1.4 Tcfe since discovery. Abraxas initiated an updated in-depth study of the fields after interpretation of a proprietary 3-D seismic survey and insightful subsurface data obtained through a farmout of the Montoya formation with EOG. The study indicates that significant amounts of gas remain in the layers of lower porosity. The results of the study have been successfully tested and Abraxas has identified a number of projects on its existing leasehold.

Stratigraphically above these prolific deep gas formations lie the shallower Bell and Cherry Canyon sandstones at approximately 4,800' and 6,500', respectively, which produces oil and liquids-rich gas. Abraxas discovered the Abraxas (Cherry Canyon) Field in 1995 and has successfully drilled approximately 50 wells in the field. The 3-D seismic survey helped define a pinchout line running north-south through the field that was further confirmed by well control. Drainage calculations support a number of in-fill projects on Abraxas' leasehold.

To the south in Pecos County (Oates SW Field), Abraxas owns a significant portion of the underlying mineral interest and the surface and executive rights in 15,000 contiguous acres. The Oates SW Field, discovered in the late 1970's, produced from vertical wells drilled to the Devonian formation before abandonment two decades later. The wells behaved similar to the vertical wells in Ward County, indicating the potential to recover additional reserves using horizontal technology. Abraxas acquired a proprietary 38 square mile 3-D seismic survey that aided in the delineation of the varying size structural traps as well as the identification of high-amplitude seismic anomalies. Abraxas has re-entered several previously abandoned wellbores and drilled one new well, all targeting the Devonian formation with horizontal laterals of various lengths. Several shallower formations are also prospective on Abraxas' acreage, namely the Lower Wolfcamp and the Woodford shale, which has led to very active leasing in the area. Information gained from our recent drilling activity combined with log and gas analysis has indicated the potential for a large resource gas play. Future development (of multiple formations) will be selected from the numerous projects Abraxas has identified in this field.

Abraxas' leasehold in the Eastern Shelf (Coke, Mitchell and Scurry Counties) is comprised of multiple fields targeting multiple reservoirs. The fields in Mitchell and Scurry Counties were discovered in the 1920's and produce sour oil from the Clearfork formations between 2,300' and 3,300'. The Millican Reef Field in Coke County was discovered in the 1960's and produces liquids-rich gas and oil from the Strawn Reef formation between 5,000' and 6,000'. Abraxas began drilling in Mitchell County in the late 1970's and subsequently increased its position in the basin through an acquisition in 1992. Multiple projects (including a waterflood project) have been identified on Abraxas' leasehold.

Note: all figures are as of 12/31/06