ABRAXAS PETROLEUM CORPORATION
 
500 North Loop 1604 East, Suite 100
 
San Antonio, Texas  78232
 
July 1, 2007

Barbara M. Stuckey
47 Westelm Circle
San Antonio, Texas 78230

Dear Barbara:

The Board of Directors (the "Board") of Abraxas Petroleum Corporation (the
"Company") has determined that appropriate steps should be taken to reinforce
and encourage the continued attention and dedication of members of the Company's
management, including yourself, to their assigned duties.  In order to induce
you to remain in the employ of the Company, in consideration of your agreement
to continue employment with the Company, and in consideration of your agreement
to the termination of any existing employment or severance agreement you may
have with the Company, the Company agrees that you shall receive, upon the terms
and conditions set forth herein, the benefits set forth in this letter agreement
("Agreement") during the term hereof.

1.           Terms of Agreement.  This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 2007 (the "Term");
provided, however, that commencing on January 1, 2008 and each January 1
thereafter, the Term shall automatically be extended for an additional year
unless, not later than December 1 of the preceding year, either party shall have
given notice that it does not wish to extend the Term.  Except in the event of a
Change in Control (as defined in Section 4 hereof), at all times during the Term
or extended Term your employment shall remain at will and may be terminated by
the Company for any reason without notice or Cause (as hereinafter defined).  If
a Change in Control shall have occurred during the original or extended Term,
the Term shall continue in effect for a period of 36 months beyond the Term in
effect immediately before such Change in Control.

2.           Term of Employment.  During the Term, you agree to be a full-time
employee of the Company serving in the position of Vice President – Corporate
Development, to devote substantially all of your working time and attention to
the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities associated with your position, to use your best
efforts to perform faithfully and efficiently such responsibilities.  In
addition, you agree to serve in such other capacities or offices to which you
may be assigned, appointed or elected from time to time by the Board.  Nothing
herein shall prohibit you from devoting your time to civic and community
activities or managing personal investments, as long as the foregoing do not
interfere with the performance of your duties hereunder.

3.           Compensation.  (a)  As compensation for your services under this
Agreement, you shall be entitled to receive base salary and other compensation
to be determined from time to time by the Board in its sole discretion.  In
addition, you shall be

 
 

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entitled to participate in any additional bonus, incentive compensation or
employee benefit arrangement which may be established from time to time by the
Company in its sole discretion.  Notwithstanding anything to the contrary
provided in this Agreement, prior to a Change in Control you shall not be
entitled to receive any compensation from the Company upon termination,
voluntary or involuntary, of your employment with the Company, regardless of the
reason for such termination.

(b)           The Company shall reimburse you, in accordance with Company policy
in effect from time to time, for all reasonable travel, entertainment and other
business expenses incurred by you in the performance of your responsibilities
under this Agreement promptly upon receipt of written substantiation of such
expenses.

4.           Change in Control. For purposes of this Agreement, a Change in
Control shall be deemed to have occurred if (a) any "person" or "group" (as such
terms are used in Section 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended, (the "Exchange Act")) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act as in effect on the date hereof,
except that a person shall be deemed to be the "beneficial owner" of all shares
that any such person has the right to acquire pursuant to any agreement or
arrangement or upon exercise of conversion rights, warrants, options or
otherwise, without regard to the sixty day period referred to in such Rule),
directly or indirectly, of securities representing 20% or more of the combined
voting power of the Company's then outstanding securities, (b) any person or
group shall make a tender offer or an exchange offer for 20% or more of the
combined voting power of the Company's then outstanding securities, (c) at any
time during any period of two consecutive years (not including any period prior
to the execution of this Agreement), individuals who at the beginning of such
period constituted the Board and any new directors, whose election by the Board
or nomination for election by the Company's stockholders was approved by a vote
of at least two-thirds (2/3) of the Company directors then still in office who
either were the Company directors at the beginning of the period or whose
election or nomination for election was previously so approved ("Current
Directors"), cease for any reason to constitute a majority thereof, (d) the
Company shall consolidate, merge or exchange securities with any other entity
and the stockholders of the Company immediately before the effective time of
such transaction do not beneficially own, immediately after the effective time
of such transaction, shares entitling such stockholders to a majority of all
votes (without consideration of the rights of any class of stock entitled to
elect directors by a separate class vote) to which all stockholders of the
corporation issuing cash or securities in the consolidation, merger or share
exchange would be entitled for the purpose of electing directors or where the
Current Directors immediately after the effective time of the consolidation,
merger or share exchange would not constitute a majority of the Board of
Directors of the corporation issuing cash or securities in the consolidation,
merger or share exchange, or (e) any person or group acquires 50% or more of the
Company's assets.

Notwithstanding the foregoing, however, a Change in Control shall not be deemed
to occur merely by reason of an acquisition of Company securities by, or any
consolidation, merger or exchange of securities with, any entity that,
immediately prior to such acquisition, consolidation, merger or exchange of
securities, was a "subsidiary", as such term is defined below.  For these
purposes, the term "subsidiary" means (a) any corporation of which 95% of the
capital stock of such corporation is owned, directly or

 
 

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indirectly, by the Company and (b) any unincorporated entity in respect of which
the Company has, directly or indirectly, an equivalent degree of ownership.

5.           Termination of Employment Following Change in Control.  Prior to a
Change in Control, your employment shall remain at will and may be terminated by
the Company for any reason without notice or Cause.  From and after a Change in
Control, you shall be entitled to the benefits provided in Subsection 6(d)
hereof upon the subsequent termination of your employment during the Term or
extended Term unless such termination is because of your death or Retirement, by
the Company for Cause or Disability, or by you other than for Good Reason.

(a)           Disability; Retirement.  If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Company for six (6) consecutive months, and
within thirty (30) days after written Notice of Termination is given you shall
not have returned to the full-time performance of your duties, the Company may
terminate your employment for "Disability."  Any question as to the existence of
your Disability upon which you and the Company cannot agree shall be determined
by a qualified independent physician selected by you (or, if you are unable to
make such selection, it shall be made by any adult member of your immediate
family), and approved by the Company.  The determination of such physician made
in writing to the Company and to you shall be final and conclusive for all
purposes of this Agreement.  Termination by the Company or you of your
employment based on "Retirement" shall mean termination in accordance with the
Company's retirement policy, generally applicable to its salaried employees or
in accordance with any retirement arrangement established with your consent with
respect to you.

(b)           Cause.  Termination by the Company of your employment for "Cause"
shall mean termination upon (i) the willful and continued failure by you to
substantially perform your duties with the Company (other than any such failure
resulting from your incapacity due to physical or mental illness or any such
actual or anticipated failure resulting from termination by you for Good Reason)
after a written demand for substantial performance is delivered to you by the
Board, which demand specifically identifies the manner in which the Board
believes that you have not substantially performed your duties, or (ii) the
willful engaging by you in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise.  For purposes of this
Subsection, no act, or failure to act, on your part shall be deemed "willful"
unless done, or omitted to be done, by you not in good faith and without
reasonable belief that your action or omission was in the best interest of the
Company.  Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to you a
copy of a resolution duly adopted by the affirmative vote (which cannot be
delegated) of not less than a majority of the members of the Board who are not
officers of the Company at a meeting of the Board called and held for such
purposes (after reasonable notice to you and an opportunity for you, together
with your counsel, to be heard before the Board), finding that in the good faith
opinion of the Board you were guilty of conduct set forth above in clauses (i)
or (ii) of the first sentence of this Subsection and specifying the particulars
thereof in detail.

 
 

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(c)           Good Reason.  You shall be entitled to terminate your employment
for Good Reason.  For purposes of this Agreement, "Good Reason" shall mean,
without your express written consent, any of the following:

(i)           a material adverse alteration in the nature or status of your
position, duties or responsibilities from those in effect immediately prior to a
Change in Control, other than any such alteration primarily attributable to the
fact that the Company may no longer be a public company or may be a subsidiary
of another entity;

(ii)           a reduction in your annual base salary as in effect immediately
prior to the Change in Control or as the same may be increased from time to
time;

(iii)           a change in the principal place of your employment, as in effect
at the time of a Change in Control, to a location more than fifty (50) miles
from such principal place of employment, excluding required travel on the
Company's business to an extent substantially consistent with your present
business travel obligations;

(iv)           the failure by the Company, without your consent, to pay to you
any portion of your current compensation, or to pay to you any portion of any
deferred compensation, within ten (10) days of the date any such compensation
payment is due;

(v)           the failure by the Company to continue in effect any compensation
plan in which you participate, or any substitute plans adopted prior to the
Change in Control, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan in
connection with the Change in Control, or the failure by the Company to continue
your participation therein on the same basis, both in terms of the amount of
benefits provided and the level of your participation relative to other
participants, as existed at the time of the Change in Control;

(vi)           the failure by the Company to continue to provide you with
benefits at least as favorable to those enjoyed by you under any of the
Company's pension, life insurance, medical, health and accident, disability,
deferred compensation or savings plans in which you were participating at the
time of the Change in Control, the taking of any action by the Company which
would directly or indirectly materially reduce any of such benefits or deprive
you of any material fringe benefit enjoyed by you at the time of the Change in
Control, or the failure by the Company to provide you with the number of paid
vacation days to which you are entitled on the basis of the Company's practice
with respect to you as in effect at the time of the Change in Control;

(vii)           the failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 7 hereof; or

(viii)           any purported termination of your employment which is not
effected pursuant to a Notice of Termination satisfying the requirements of
Subsection (d) below (and, if applicable, the requirements of Subsection (b)
above); for purposes of this Agreement, no such purported termination shall be
effective.

 
 

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(d)           Notice of Termination.  Prior to a Change in Control, you may be
terminated with or without notice.  From and after a Change in Control, any
purported termination of your employment by the Company or by you shall be
communicated by written notice to the other party hereto in accordance with
Section 8 hereof ("Notice of Termination").  Such Notice of Termination shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provisions so
indicated.

(e)           Date of Termination, Etc.  Prior to a Change in Control, "Date of
Termination" shall mean the date your employment is terminated.  From and after
a Change in Control, "Date of Termination" shall mean (i) if your employment is
terminated for Disability, 30 days after Notice of Termination is given
(provided that you shall not have returned to the full-time performance of your
duties during such 30 day period, and (ii) if your employment is terminated
pursuant to Subsections 5(b) or 5(c) above or for any other reason (other than
Disability), the date specified in the Notice of Termination (which, in the case
of a termination pursuant to Subsection 5(b) above shall not be less than 10
days, and in the case of a termination pursuant to Subsection 5(c) above shall
not be less than 30 nor more than 60 days, respectively, from the date such
Notice of Termination is given) (except for a termination pursuant to Subsection
5(c)(vii), in which event the date upon which any succession referred to therein
becomes effective shall be deemed the Date of Termination); provided that if at
any time from and after a Change in Control within 30 days after any Notice of
Termination is given the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (which
is not appealable or the time for appeal therefrom having expired and no appeal
having been perfected); provided further that at any time from and after a
Change in Control the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.  From
and after a Change in Control, the Company will continue to pay you your full
compensation in effect when the notice giving rise to the dispute was given
(including, but not limited to, base salary) or, if higher, the compensation in
effect as of the Change in Control, and continue you as a participant in all
compensation, benefit and insurance plans in which you were participating when
the notice giving rise to the dispute was given, until the dispute is finally
resolved in accordance with this Subsection 5(e), notwithstanding the pendency
of any such dispute.  Amounts paid under this Subsection 5(e) from and after a
Change in Control are in addition to all other amounts due under this Agreement
and shall not be offset against or reduce any other amounts due under this
Agreement.  Prior to a Change in Control, you shall not be entitled to be paid
any compensation or other amounts due under this Agreement from and after the
Date of Termination.

6.           Compensation Upon Termination or During Disability.  From and after
a Change in Control, upon termination of your employment or during a period of
Disability you shall be entitled to the following benefits:

 
 

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(a)           During any period that you fail to perform your full-time duties
with the Company as a result of your Disability, you shall continue to receive
your base salary at the rate in effect at the commencement of any such period,
together with all compensation payable to you under the Company's disability
plan or other plan during such period, until this Agreement is terminated
pursuant to Subsection 5(a) hereof.  Thereafter, your benefits shall be
determined in accordance with the Company's long-term disability plan as in
effect immediately prior to a Change in Control.

(b)           If your employment shall be terminated by the Company for Cause or
by you other than for Good Reason, Disability, death or Retirement, the Company
shall pay you your full base salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given and any amounts to be paid
to you pursuant to the Company's retirement and other benefits plans of the
Company then in effect, and the Company shall have no further obligations to you
under this Agreement.

(c)           If your employment shall be terminated by the Company or by you
for Retirement, or by reason of your death, your benefits shall be determined in
accordance with the Company's retirement, benefit and insurance programs then in
effect.

(d)           If your employment by the Company shall be terminated by the
Company other than for Cause and other than because of your death, Disability or
Retirement or by you for Good Reason then, effective as of the Date of
Termination, in lieu of any severance benefits which you otherwise would be
eligible to receive under the Company's severance plan or policy as in effect
immediately prior to the Change in Control, you shall be entitled to the
benefits provided below:

(i)           The Company shall pay you your full base salary through the Date
of Termination at the rate in effect at the time the Notice of Termination is
given, plus all other amounts to which you are entitled under any compensation
or benefit plan of the Company (excluding any severance benefits under the
Company's severance plan or policy) at the time such payments are due under the
terms of such plans.

(ii)           In lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall pay to you, not later
than the fifth day following the Date of Termination, a lump sum payment equal
to three times your annual base salary.

(iii)           The Company shall also pay to you all legal fees and expenses
incurred by you as a result of such termination (including all such fees and
expenses, if any, incurred in contesting or disputing any such termination or in
seeking to obtain or enforce any right or benefit provided by this Agreement).

(iv)           Notwithstanding any other provision of this Agreement, if any
amount payable hereunder ("Payments") would, individually or together with any
other amounts paid or payable, constitute an "excess parachute payment", within
the meaning of Section 280G of the Internal Revenue Code of 1986 and any
applicable regulations thereunder (the "Code") which would require the payment
by you of the excise tax imposed by Section 4999 of the Code or any interest or
penalty (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as

 
 

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the "Excise Tax"), then you shall be entitled to receive an additional Payment
(the "Gross-Up Payment") in an amount such that after the payment by you of all
taxes (including any interest or penalties imposed with respect to such taxes)
including, without limitation, any income taxes (and any interest and penalties
with respect thereto) and the Excise Tax imposed upon the Gross-Up Payment, you
shall retain an amount of the Gross-Up Payment equal to the Excise Tax imposed
upon the total Payments to be received by you pursuant to this Agreement.  The
determination of whether the Gross-Up Payment shall be paid shall be made by a
nationally recognized accounting firm selected by you and such determination
shall be binding upon you and the Company for purposes of this Agreement.  The
costs and expenses of such accounting firm shall be paid by the Company.

(e)           Except as specifically provided in this Section 6, you shall not
be required to mitigate the amount of any payment provided for in this Section 6
by seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Section 6 be reduced by any compensation earned by
you as the result of employment by another employer or by retirement benefits
after the Date of Termination, or otherwise.

(f)           In addition to all other amounts payable to you under this Section
6, you shall be entitled to receive all benefits payable to you under any other
plan or agreement relating to retirement benefits in accordance with the terms
of such plan or agreement.

7.           Successors; Binding Agreement.  (a)  The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place.  Such assumption and agreement shall be
obtained prior to the effectiveness of any such succession.  As used in this
Agreement, "Company" shall mean the Company as herein before defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.  Prior to a Change in
Control, the term "Company" shall also mean any affiliate of the Company to
which you may be transferred and Company shall cause such successor employer to
be considered the "Company" bound by the terms of this Agreement and this
Agreement shall be amended to so provide.  Following a Change in Control the
term "Company" shall not mean any affiliate of the Company to which you may be
transferred unless you shall have previously approved of such transfer in
writing, in which case the Company shall cause such successor employer to be
considered "Company" bound by the terms of this Agreement and this Agreement
shall be amended to so provide.

(b)           This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.  If you should die while any amount
would still be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee or other designee or, if there
is no such designee, to your estate.

 
 

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8.           Notice.  For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the Board
with a copy to the Secretary of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.

9           Miscellaneous.  No provision of this Agreement shall be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by you and such officer as may be specifically designated
by the Board.  No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.  No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement.  THE VALIDITY,
INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED
BY THE LAWS OF THE STATE OF TEXAS.

10           Validity.  The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

11.           Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

12.           Arbitration.  THIS AGREEMENT IS SUBJECT TO ARBITRATION UNDER THE
TEXAS ARBITRATION ACT.  Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
San Antonio, Texas in accordance with the rules of the American Arbitration
Association then in effect.  Judgment may be entered on the arbitrator's award
in any court having jurisdiction; provided, however, that you shall be entitled
to seek specific performance of your right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.

13.           Entire Agreement.  This Agreement contains the entire agreement by
the parties with respect to the matters covered herein and supersedes any prior
agreement (including, without limitation, any prior employment or severance
agreement), condition, practice, custom, usage and obligation with respect to
such matters insofar as any such prior agreement, condition, practice, custom,
usage or obligation might have given rise to any enforceable right.

 
 

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If this letter sets forth our agreement on the subject matter hereof, kindly
sign and return to the Company the enclosed copy of this letter which will then
constitute our agreement on this subject.

Sincerely,

ABRAXAS PETROLEUM CORPORATION

By:                                                                           
Robert L. G. Watson
Chief Executive Officer

Agreed to this ______ day of
July, 2007

Barbara M. Stuckey