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

                                  June 6, 2005
                Date of Report (Date of earliest event reported)

                          ABRAXAS PETROLEUM CORPORATION
             (Exact name of registrant as specified in its charter)

Nevada                              0-19118                    74-2584033
(State or other jurisdiction of    (Commission              (IRS Employer
 incorporation)                     File Number)             Identification No.)

                        500 N. Loop 1604 East, Suite 100
                            San Antonio, Texas 78232
                                 (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):

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

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

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

[ ] 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

         Adoption of 2005 Directors Plan

         On June 1, 2005,  Abraxas  Petroleum  Corporation  held its 2005 Annual
Meeting of Stockholders at which the stockholders approved the 2005 Non-Employee
Directors  Long-Term  Equity  Incentive Plan (the "2005  Directors  Plan").  The
following is a summary of the Directors Plan. The following summary is qualified
in its  entirety by  reference  to the 2005  Directors  Plan, a copy of which is
attached hereto as Exhibit 10.1.

         Purpose.  The  purpose of the 2005  Directors  Plan is to  attract  and
retain  members of the Board of Directors  and to promote the growth and success
of Abraxas by aligning the  long-term  interests of the Board of Directors  with
those of  Abraxas'  stockholders  by  providing  an  opportunity  to  acquire an
interest in Abraxas and by providing  both rewards for  exceptional  performance
and long term incentives for future contributions to the success of Abraxas.

         Administration  and  Eligibility.  The  2005  Directors  Plan  will  be
administered  by the  Compensation  Committee (the  "Committee") of the Board of
Directors and authorizes the Board to grant non-qualified stock options or issue
restricted  stock to those  persons who are  non-employee  directors of Abraxas,
including advisory  directors of Abraxas,  which currently amounts to a total of
ten people.

         Shares  Reserved and Awards.  The 2005 Directors Plan reserves  900,000
shares of Abraxas common stock,  subject to adjustment following certain events,
as discussed  below.  The 2005  Directors  Plan  provides that each year, at the
first regular meeting of the Board of Directors  immediately  following Abraxas'
annual  stockholder's  meeting,  each non-employee  director shall be granted or
issued awards of 10,000 shares of Abraxas  common stock,  for  participation  in
Board and Committee  meetings  during the previous  calendar  year.  The maximum
annual award for any one person is 10,000  shares of Abraxas  common  stock.  If
options, as opposed to shares, are awarded, the exercise share price shall be no
less  than  100% of the fair  market  value on the date of the  award  while the
option terms and vesting schedules are at the discretion of the Committee.

         Option Exercise.  An option is exercised when proper notice of exercise
has been given to Abraxas,  or the brokerage  firm or firms approved by Abraxas,
if any, to facilitate exercises and sales under the 2005 Directors Plan and full
payment for the shares with  respect to which the option is  exercised  has been
received  by  Abraxas  or the  brokerage  firm  or  firms,  as  applicable.  The
consideration  to be paid and the method of payment,  shall be determined by the
Committee and may include:  (i) a cashless exercise,  whereby the exercise price
is paid to Abraxas  from the  proceeds  of a  same-day  sale of a portion of the
stock  underlying  the option;  (ii) cash;  and (iii) tender of shares of common
stock owned by the  participant.  Option  shares used to pay the exercise  price
shall be valued at their fair market value on the exercise date.  Payment of the
aggregate exercise price by means of tendering previously-owned shares of common
stock shall not be  permitted  when the same may, in the  reasonable  opinion of
Abraxas, cause Abraxas to record a loss or expense as a result thereof.

         Stockholder Rights.  Except as otherwise provided in the 2005 Directors
Plan, until the issuance of the share certificates  evidencing the award shares,
no right to vote or receive dividends or any other rights as a stockholder shall
exist with respect to the award shares.

         Transferability of Awards. An award may not be sold, pledged, assigned,
hypothecated,  transferred, or disposed of in exchange for consideration, except
that  an  award  may be  transferred  by  will  or by the  laws  of  descent  or
distribution and may be exercised, during the lifetime of the participant,  only
by the participant,  unless the Committee permits further transferability,  on a
general or specific basis, in which case the Committee may impose conditions and
limitations on any permitted transferability.

         Termination  of Awards.  Unless  otherwise  provided in the  applicable
award agreement or any severance agreement, vested awards granted under the 2005
Directors Plan shall expire, terminate, or otherwise be forfeited as follows: 

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         o  three (3)  months  after the date the  Company  delivers a notice of
            termination  of  a  Participant's   Active  Status,  other  than  in
            circumstances covered by the following three circumstances;

         o  immediately  upon  termination of a Participant's  Active Status for
            Misconduct;

         o  twelve  (12)  months  after the date of the  death of a  Participant
            whose Active Status terminated as a result of his or her death; and

         o  thirty-six  (36)  months  after  the date on which  the  Participant
            ceased performing services as a result of Retirement.

     U.S. Federal Tax Consequences.

         Options.  Participants will not recognize taxable income at the time an
option is granted under the 2005  Directors Plan unless the option has a readily
ascertainable  market  value at the time of grant.  The Board  understands  that
options  to be  granted  under the 2005  Directors  Plan will not have a readily
ascertainable  market  value;  therefore,  income  will  not  be  recognized  by
participants  before the time of exercise of an option.  The difference  between
the fair market value of the shares at the time an option is  exercised  and the
option price  generally will be treated as ordinary  income to the optionee,  in
which case  Abraxas  will be entitled to a deduction  equal to the amount of the
optionee's ordinary income.

         Restricted  Stock.  A  participant  who receives a grant of  restricted
stock  who does not  elect to be taxed at the time of grant  will not  recognize
income upon an award of shares of common stock, and Abraxas will not be entitled
to a deduction until the termination of the restrictions. Upon such termination,
the  participant  will recognize  ordinary income in an amount equal to the fair
market  value of the  common  stock at the time  (less  any  amount  paid by the
employee  for such  shares),  and Abraxas will be entitled to a deduction in the
same  amount  after  satisfying  federal  income tax  withholding  requirements.
However,  the participant may elect to recognize ordinary income in the year the
restricted  stock is granted in an amount  equal to the fair market value of the
shares at that time,  determined  without  regard to the  restrictions.  In that
event,  Abraxas  will be entitled  to a  deduction  in such year and in the same
amount.  Any  gain  or  loss  recognized  by  the  participant  upon  subsequent
disposition of the stock will be capital in nature.

         Amendments.  Abraxas' Board or the Committee may amend or terminate the
2005  Directors  Plan from time to time in such  respects  as the Board may deem
advisable  (including,  but not  limited  to,  amendments  which the Board deems
appropriate to enhance  Abraxas'  ability to claim  deductions  related to stock
option exercises); provided, that to the extent required by the Internal Revenue
Code of 1986,  as amended,  or the rules of the AMEX,  such other  exchange upon
which Abraxas common stock is either quoted or traded,  or the SEC,  stockholder
approval  shall be required  for any material  amendment  of the 2005  Directors
Plan.  Subject to the foregoing,  it is specifically  intended that the Board or
Committee be able to amend the 2005 Directors Plan without stockholder  approval
to  comply  with  legal,  regulatory  and  listing  requirements  and  to  avoid
unanticipated  consequences  deemed by the Committee to be inconsistent with the
purpose of the 2005 Directors Plan or any award agreement.

         Adjustments.  If the outstanding  shares of Abraxas' common stock shall
be changed into or exchanged  for a different  number or kind of shares of stock
or other securities or property of Abraxas or of another corporation,  or if the
number of such shares of common stock shall be increased by a stock  dividend or
stock  split,  there shall be  substituted  for or added to each share of common
stock reserved for the purposes of the 2005 Directors Plan,  whether or not such
shares are at the time  subject to  outstanding  awards,  the number and kind of
shares of stock or other  securities  or  property  into which each  outstanding
share of common stock shall be so changed or for which it shall be so exchanged,
or to which each such share shall be entitled,  as the case may be.  Outstanding
awards  shall also be  considered  to be  appropriately  amended as to price and
other terms as may be necessary or appropriate to reflect the foregoing  events.
If there  shall be any  other  change in the  number or kind of the  outstanding
shares of Abraxas' common stock, or of any stock or other securities or property
into which such common stock shall have been changed, or for which it shall have
been exchanged, and if the Committee shall in its sole discretion determine that
such change  equitably  requires an adjustment in the number or kind or price of
the shares then reserved for the purposes of the 2005 Directors  Plan, or in any


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award previously  granted or which may be granted under the 2005 Directors Plan,
then such  adjustment  shall be made by the Committee and shall be effective and
binding for all purposes of the 2005 Directors Plan.

         In addition,  the Committee  shall have the power,  in the event of any
merger or  consolidation  involving  Abraxas to amend all outstanding  awards to
permit  the  exercise  thereof in whole or in part at  anytime,  or from time to
time,  prior to the effective  date of any such merger or  consolidation  and to
terminate each such award as of such effective date.

         Initial Awards under the Directors Plan

         On June 1, 2005,  in accordance  with the terms of the Directors  Plan,
each  eligible  director of Abraxas  was  granted an option to  purchase  10,000
shares of Abraxas  common stock at an exercise  price of $2.75 per share. A copy
of the form of Option  Agreement  issuable  under the Directors Plan is attached
hereto as Exhibit 10.2.

         Annual Salaries and Director Fees


         On June 1, 2005  (effective  April 1,  2005),  the  Board of  Directors
approved the following  annual  salaries for the  executive  officers of Abraxas
named below:

   -----------------------------------------------------------------------------
   Robert L.G. Watson,                                                  $314,000
   Chairman of the Board,
   President and Chief Executive Officer
   -----------------------------------------------------------------------------
   Chris E. Williford,                                                  $193,000
   Executive Vice President,
   Chief Financial Officer and Treasurer
   -----------------------------------------------------------------------------
   Robert  W. Carington, Jr.,                                           $235,000
   Executive Vice President
   -----------------------------------------------------------------------------
   Lee T. Billingsley                                                   $181,000
   Vice President--Exploration
   -----------------------------------------------------------------------------
   William H. Wallace,                                                  $181,000
   Vice President--Operations
   -----------------------------------------------------------------------------

         In  2005,  each  director  who is not an  employee  of  Abraxas  or its
affiliates will receive an annual fee of $12,000 annually,  plus $1,500 for each
meeting attended and $1,000 for each committee meeting attended.

Item 1.02 Termination of Material Definitive Agreement.

         On June 1,  2005,  the  Board of  Directors  of  Abraxas  approved  the
termination of and terminated  option  agreements with certain employees of Grey
Wolf Exploration Inc., Abraxas' former  wholly-owned  Canadian  subsidiary.  The
options  had been  previously  granted  pursuant  to  Abraxas'  1994  Long  Term
Incentive  Plan and covered a total of 114,614  shares of Abraxas  common  stock
with an  average  exercise  price of $0.665 per share.  In  connection  with the
termination,  Abraxas  transferred a total of 107,166 shares of Grey Wolf common
stock owned by Abraxas to the former option holders which amount represented the
difference  between the  exercise  price of the options and the market  value of
Abraxas  common stock on February 28, 2005 ($2.79 per share) and also received a
full and final  release from each of the former option  holders  relating to any
potential claims against Abraxas.

Item 9.01 Financial Statements and Exhibits.

         (c) Exhibits.

                  10.1  Abraxas   Petroleum    Corporation   2005   Non-Employee
                        Directors Long-Term Equity Incentive Plan

                  10.2  Form  of  Stock  Option   Agreement  under  the  Abraxas
                        Petroleum   Corporation  2005  Non-  Employee  Directors
                        Long-Term Equity Incentive Plan SIGNATURES

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         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:______________________________
                                      Chris E. Williford
                                      Executive Vice President, Chief Financial
                                      Officer and Treasurer
Dated:  June 6, 2005