Prospectus Supplement No. 3                    Filed Pursuant to Rule 424(b)(3)
to Prospectus dated August 11, 2003.      Registration Statement No. 333-103027



                          ABRAXAS PETROLEUM CORPORATION

                    11 1/2% Secured Notes due 2007, Series A

                    6,592,699 Shares of Abraxas Common Stock

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     We are  supplementing  the Prospectus dated August 11, 2003, the Prospectus
Supplement No. 1 dated August 15, 2003 and the Prospectus Supplement No. 2 dated
November 20, 2003, to add certain information contained in our Current Report on
Form 8-K dated  February 26, 2004.  This  prospectus  supplement is not complete
without,  and may not be delivered or utilized  except in connection  with,  the
Prospectus  dated August 11, 2003,  Prospectus  Supplement  No. 1 and Prospectus
Supplement No. 2, with respect to the securities described above,  including any
amendments or supplements thereto.

     This prospectus supplement, together with the prospectuses listed above, is
to be used by certain  holders of the  above-referenced  securities  or by their
transferees,  pledges,  donees or their  successors in connection with the offer
and sale of the above referenced  securities.  This prospectus supplement should
be read in  conjunction  with the prospectus  dated August 11, 2003,  Prospectus
Supplement  No. 1 dated August 15, 2003 and  Prospectus  Supplement  No. 2 dated
November 20, 2003 that are to be delivered with this prospectus supplement.  All
capitalized terms used but not defined in this prospectus  supplement shall have
the meanings given them in the prospectus dated August 11, 2003.

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     You should carefully  consider the risk factors beginning on page 12 of the
prospectus  dated August 11, 2003,  before  making an investment in the notes or
common stock.

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     Neither  the  SEC nor any  state  securities  commission  has  approved  or
disapproved  of the notes or the  Abraxas  common  stock or  determined  if this
prospectus  supplement  or the  prospectus  dated August 11, 2003 is accurate or
complete. Any representation to the contrary is a criminal offense.



                                February 27, 2004






     On February  23,  2004,  Abraxas  entered into an amendment to its existing
senior credit agreement  providing for two revolving credit facilities and a new
non-revolving credit facility as described below. Subject to earlier termination
on the occurrence of events of default or other events, the stated maturity date
for these  credit  facilities  is  February  1,  2007.  In the event of an early
termination,  we will be required  to pay a  prepayment  premium,  except in the
limited circumstances described in the amended senior credit agreement.

     First Revolving  Credit  Facility.  Lenders under the amended senior credit
agreement  have provided a revolving  credit  facility to Abraxas with a maximum
borrowing  base of up to $20  million.  Our  current  borrowing  base under this
revolving  credit  facility is the full $20.0  million,  subject to  adjustments
based on periodic calculations and mandatory prepayments under the senior credit
agreement.  We have borrowed $6.6 million under this revolving  credit facility,
which  was used to  refinance  principal  and  interest  on  advances  under our
preexisting revolving credit facility under the senior credit agreement,  and to
pay certain fees and expenses relating to the transaction.  Outstanding  amounts
under this revolving  credit  facility bear interest at the prime rate announced
by Wells Fargo Bank, N.A. plus 1.125%.

     Second Revolving  Credit Facility.  Lenders under the amended senior credit
agreement have provided a second  revolving  credit facility to Abraxas,  with a
maximum  borrowing of up to $30 million.  This revolving  credit facility is not
subject to a borrowing base. We have borrowed $30.0 million under this revolving
credit facility,  which was used to refinance principal and interest on advances
under our preexisting revolving credit facility,  and to pay certain transaction
fees and expenses. Outstanding amounts under this revolving credit facility bear
interest at the prime rate announced by Wells Fargo Bank, N.A. plus 3.00%.

     Non-Revolving Credit Facility.  Abraxas has borrowed $15.0 million pursuant
to a non-revolving credit facility, which was used to repay the preexisting term
loan under our senior credit agreement,  to refinance  principal and interest on
advances under the preexisting  revolving  credit  facility,  and to pay certain
transaction fees and expenses. This non-revolving credit facility is not subject
to a  borrowing  base.  Outstanding  amounts  under this  credit  facility  bear
interest at the prime rate announced by Wells Fargo Bank, N.A. plus 8.00%.

     Covenants. Under the amended senior credit agreement, Abraxas is subject to
customary  covenants and reporting  requirements.  Certain  financial  covenants
require Abraxas to maintain minimum ratios of consolidated EBITDA (as defined in
the amended senior credit  agreement) to adjusted fixed charges (which  includes
certain capital  expenditures),  minimum ratios of  consolidated  EBITDA to cash
interest  expense,  a minimum level of  unrestricted  cash and revolving  credit
availability,   minimum  hydrocarbon   production  volumes  and  minimum  proved
developed  hydrocarbon  reserves.  In addition,  if on the day before the end of
each  fiscal  quarter  the  aggregate  amount  of our cash and cash  equivalents
exceeds  $2.0  million,  we are  required  to repay the loans  under the amended
senior credit  agreement in an amount equal to such excess.  The amended  senior
credit  agreement also requires us to enter into hedging  agreements on not less
than 40% or more than 75% of our projected oil and gas  production.  We are also
required to establish deposit accounts at financial  institutions  acceptable to
the lenders and we are  required to direct our  customers  to make all  payments
into these  accounts.  The amounts in these  accounts will be transferred to the
lenders upon the  occurrence  and during the  continuance of an event of default
under the amended senior credit agreement.

                                      S-2


     In addition to the foregoing  and other  customary  covenants,  the amended
senior credit agreement contains a number of covenants that, among other things,
restrict our ability to:

          o  incur additional indebtedness;

          o  create or permit to be created liens on any of our properties;

          o  enter into change of control transactions;

          o  dispose of our assets;

          o  change our name or the nature of our business;

          o  make guarantees with respect to the obligations of third parties;

          o  enter into forward sales contracts;

          o  make  payments  in  connection  with  distributions,  dividends  or
             redemptions relating to our outstanding securities, or

          o  make investments or incur liabilities.

     Security.  The  obligations  of Abraxas  under the  amended  senior  credit
agreement  continue  to  be  secured  by  a  first  lien  security  interest  in
substantially  all of Abraxas'  assets,  including all crude oil and natural gas
properties.

     Guarantees.  The  obligations  of Abraxas  under the amended  senior credit
agreement continue to be guaranteed by Abraxas' subsidiaries,  Sandia Oil & Gas,
Sandia  Operating,  Wamsutter,  New Grey  Wolf,  Western  Associated  Energy and
Eastside Coal. The guarantees under the amended senior credit agreement continue
to be secured by a first lien  security  interest  in  substantially  all of the
guarantors' assets, including all crude oil and natural gas properties.

     Events of Default.  The amended senior credit agreement  contains customary
events of default, including nonpayment of principal or interest,  violations of
covenants,  inaccuracy of representations or warranties in any material respect,
cross default and cross acceleration to certain other indebtedness,  bankruptcy,
material  judgments and liabilities,  change of control and any material adverse
change in our financial condition.