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 24, 2006
                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       (Commission            (IRS Employer
          of 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.

     In 2003, the Board of Directors of Abraxas Petroleum Corporation adopted an
annual bonus plan which  established  certain criteria for the payment of annual
bonuses to Abraxas'  President and Executive  Vice  Presidents.  Under the plan,
each participant is given an annual bonus  opportunity  based on the achievement
of a goal related to the Net Asset Value ("NAV"),  on a per share basis,  of the
Company's  common stock,  established by the Board of Directors  after assessing
recommendations  by the Chief  Executive  Officer.  Bonuses may be paid in cash,
stock, or a combination of both. On February 24, 2006, the Board determined that
the plan should  include the President,  all Executive  Vice  Presidents and all
Vice  Presidents of Abraxas who are  responsible for geological and drilling and
development activities for Abraxas' operations. The plan provides that the bonus
will equal the percentage increase in NAV per share over the previous year's NAV
per  share  for the  first  10%  increase  and  twice  the  percentage  increase
thereafter with a maximum award for any one year of 70% of annual salary.  Under
the plan,  the  board has the  prerogative  to  adjust  the bonus  earned by any
participant,   including   Messrs.   Watson,   Williford  and  Wallace  and  Dr.
Billingsley,  to take into account extraordinary factors not contemplated by the
bonus plan when the impact of such contributions or factors cannot be adequately
reflected by the bonus determined  under the methodology  described above and to
determine the cash and/or share  component of any earned  awards.  For 2005, the
goal for NAV was met. In addition,  the Board increased the bonus earned by each
participant  as a  result  of  Abraxas'  strong  performance  during  2005.  The
following bonuses were approved by the Board on February 24, 2006:

                       Name                        Bonus Amount

                Robert L.G. Watson                  $269,800
                Chris E. Williford                   142,600
                Lee T. Billingsley                   122,107
                William H. Wallace                   122,107

     In addition,  pursuant to the terms of a Severance Agreement with Robert W.
Carington,  Jr.,  Abraxas'  former Executve Vice  President,  Mr.  Carington was
awarded a bonus of $137,083, related to the above described bonus plan.

Item 7.01 Regulation FD Disclosure

     On February 27, 2006,  Abraxas announced in a press release the replacement
of 280% of 2005 production at a finding cost of $2.03 per Mcfe

     The  information  in this Item 7.01  (including  Exhibit 99.1) is furnished
pursuant to and shall not be deemed  "filed"  for  purposes of Section 18 of the
Securities  Exchange  Act of 1934,  as  amended,  or  otherwise  subject  to the
liabilities of that Section.  The  information in this Report will not be deemed
an admission as to the materiality of any  information  required to be disclosed
solely to satisfy the requirements of Regulation FD.



Item 9.01 Financial Statements and Exhibits

              (a) Not applicable.

              (b) Not applicable.

              (c) Exhibits

                  99.1     Press  Release  dated   February  27,  2006  "Abraxas
                           Replaces 280% of 2005 Production at a Finding Cost of
                           $2.03 per Mcfe."










                                   SIGNATURES

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/ Chris E. Williford
                                  ------------------------------------------
                                 Chris E. Williford, Executive Vice President,
                                 Chief Financial Officer and Treasurer

                                 Dated:  February 28, 2006