AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER, dated as of June 30, 2009 (this “ Agreement ”), is entered into by and between ABRAXAS PETROLEUM CORPORATION, a Nevada corporation (“ Abraxas ”) and ABRAXAS ENERGY PARTNERS, L.P., a Delaware limited partnership (“ Energy ”).

WHEREAS, the Board of Directors of Abraxas (the “ Abraxas Board ”), has considered this Agreement and the transactions contemplated hereby and, has, upon the recommendation of the Abraxas Special Committee and as more particularly described in Section 5.5(a) , (i) determined that this Agreement and the transactions contemplated hereby, including consummating the business combination provided for in this Agreement, pursuant to which Energy will, subject to the terms and conditions set forth herein, merge with and into Abraxas   (the “ Merger ”), with Abraxas   surviving, are advisable, fair and reasonable to and in the best interests of Abraxas and its stockholders and (ii) approved and adopted this Agreement and determined to recommend its adoption and approval of the Stock Issuance by the Abraxas Stockholders;

WHEREAS, the Audit and Conflicts Committee of the GP Board, consisting solely of independent directors, which directors are also independent of Abraxas (the “ Energy Committee ”) has considered the transactions contemplated by this Agreement and determined that this Agreement and the transactions contemplated hereby are advisable, fair and reasonable to and in the best interests of the Unaffiliated Unitholders and Energy, and resolved to recommend that the full GP Board adopt this Agreement, approve the transactions contemplated hereby and recommend adoption and approval by the Energy Unitholders;

WHEREAS, the Board of Directors of Abraxas General Partner, LLC, a Delaware limited liability company (the “ GP Board ”) and the general partner of Energy (the “ GP ”), has considered this Agreement and the transactions contemplated hereby and, has, upon the recommendation of the Energy Committee and as more particularly described in Section 4.5(a), (i) determined that this Agreement and the transactions contemplated hereby, including the Merger, are advisable, fair and reasonable to and in the best interests of the Unaffiliated Unitholders and Energy and (ii) approved and adopted this Agreement and determined to recommend its adoption and approval by the Energy Unitholders;

WHEREAS, simultaneous with the execution and delivery of this Agreement, Unaffiliated Unitholders owning approximately 96% of the Energy Common Units not owned by Abraxas and the Abraxas Subsidiaries have executed and delivered the Voting Agreement; and

WHEREAS, the parties desire to make certain representations, warranties, covenants and agreements in connection with the Merger and the transactions contemplated by this Agreement and also to set forth certain terms and conditions to the Merger.

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

1.1   Certain Definitions .  As used in this Agreement, the following terms shall have the meanings set forth below:

“ Abraxas ” shall have the meaning set forth in the introductory paragraph to this Agreement.

“ Abraxas Board ” shall have the meaning set forth in the recitals to this Agreement.

“ Abraxas Change in Recommendation ” shall have the meaning set forth in Section  7.2(b) .

“ Abraxas Common Stock ” shall mean the common stock, par value $0.01 per share, of Abraxas.

“ Abraxas Credit Facility ” shall mean that certain Credit Agreement, dated as of June 27, 2007, and the Loan Documents (as defined therein), as amended from time to time, among Abraxas, the lenders party thereto, and Société Générale, as Administrative Agent and Issuing Lender.

 “ Abraxas Directors Plan ” shall mean the Abraxas Petroleum Corporation 2005 Non-Employee Directors Long-Term Equity Incentive Plan.

“ Abraxas Financial Advisor ” shall have the meaning set forth in Section  5.5(c) .

“ Abraxas LTIP ” shall mean the Abraxas Petroleum Corporation 2005 Employee Long-Term Equity Incentive Plan.

“ Abraxas Material Adverse Effect ” shall have the meaning set forth in Section  5.1 .

“ Abraxas Meeting ” shall have the meaning set forth in Section  7.2(b) .

“ Abraxas Operating ” shall mean Abraxas Operating, LLC, a Texas limited liability company and wholly-owned subsidiary of Energy.

“ Abraxas Permits ” shall have the meaning set forth in Section  5.7(b) .

“ Abraxas Recommendation ” shall have the meaning set forth in Section  7.2(b) .

“ Abraxas Restricted Stock ” shall mean awards of restricted stock pursuant to the Abraxas LTIP.

“ Abraxas Special Committee ” shall mean the Special Committee of the Abraxas Board, consisting solely of independent directors, which directors are also independent of Energy.

“ Abraxas Stock Options ” shall have the meaning set forth in Section  3.5(a) .

“ Abraxas Stockholder Approval ” shall have the meaning set forth in Section  8.1 .

“ Abraxas Subsidiaries ” shall have the meaning set forth in Section  6.2 .

“ Affiliate ” shall mean, with respect to any Person, those other Persons that, directly or indirectly, control or are controlled by, or are under common control with, such Person; provided , however , that, for purposes of this Agreement, Energy and Abraxas Operating shall not be considered Affiliates of Abraxas, and Abraxas and its Subsidiaries shall not be considered Affiliates of Energy, unless otherwise expressly stated herein.

“ Agreement ” shall have the meaning set forth in the introductory paragraph to this Agreement.

“ Annual Report ” shall have the meaning set forth in Section  5.8(b) .

“ Applicable Number ” shall have the meaning set forth in Section  3.1(a) .

“ Benefit Plan ” shall have the meaning set forth in Section  4.3(d) .

“ Business Day ” shall mean any day which is not a Saturday, Sunday or other day on which banks are authorized or required to be closed in the City of San Antonio, Texas.

“ Certificate ” shall have the meaning set forth in Section  3.1(c) .

“ Certificate of Merger ” shall have the meaning set forth in Section  2.1(b) .

“ Claim ” shall have the meaning set forth in Section  7.6(a) .

“ Closing ” shall have the meaning set forth in Section  2.2 .

“ Closing Date ” shall have the meaning set forth in Section  2.2 .

“ Code ” shall mean the Internal Revenue Code of 1986, as amended.

“ Contracts ” shall have the meaning set forth in Section  4.6(a) .

“ Delaware LP Act ” shall mean the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. Section 17-101 et seq., as amended.

“ Effective Time ” shall have the meaning set forth in Section  2.1(b) .

“ Energy ” shall have the meaning set forth in the introductory paragraph of this Agreement.

“ Energy Change in Recommendation ” shall have the meaning set forth in Section  7.2(a) .

“ Energy Committee ” shall have the meaning set forth in the recitals to this Agreement.

“ Energy Common Units ” shall mean the common units representing limited partnership interests of Energy having the rights and obligations specified in the Partnership Agreement.

“ Energy Credit Agreement ” shall mean the Credit Agreement, dated as of January 31, 2008, and the Loan Documents (as defined therein), as amended from time to time, among Energy, the lenders party thereto, Société Générale, as Administrative Agent and Issuing Lender, The Royal Bank of Canada, as Syndication Agent, and The Royal Bank of Scotland PLC, as Document Agent.

“ Energy Director Designees ” shall have the meaning set forth in Section  7.7 .

“ Energy Financial Advisor ” shall have the meaning set forth in Section  4.5(c) .

“ Energy LTIP ” shall mean the Abraxas Energy Partners, L.P. Amended and Restated Long-Term Incentive Plan, amended and restated as of January 14, 2009.

“ Energy Material Adverse Effect ” shall have the meaning set forth in Section  4.1 .

“ Energy Meeting ” shall have the meaning set forth in Section  7.2(a) .

“ Energy Phantom Units ” shall mean the Energy Phantom Units granted under the Energy LTIP.

“ Energy Recommendation ” shall have the meaning set forth in Section  7.2(a) .

“ Energy Restricted Units ” shall mean Energy Restricted Common Units granted under the Energy LTIP.

“ Energy Subordinated Credit Agreement ” shall mean the Subordinated Credit Agreement dated as of January 31, 2008 and the Loan Documents (as defined therein), as amended from time to time, by and among Energy, the lenders party thereto, Société Générale, as Administrative Agent, and The Royal Bank of Canada, as Syndication Agent.

“ Energy Unit Options ” shall mean options to purchase Energy Common Units to be granted under the Energy LTIP upon consummation of the initial public offering of the Energy Common Units.

“ Energy Unitholder Approval ” shall mean the approval of the owners of 80% of the Energy Common Units of the transactions contemplated by this Agreement including the Merger.

“ Energy Unitholders ” shall mean the holders of Energy Common Units.

“ Environmental Laws and Regulations ” shall mean all Laws of any Governmental Authority relating to pollution, nuisance, natural resources or the protection of health and safety (relating to exposure to Hazardous Materials), the environment, (including emissions, discharges, Releases, or threatened Releases of any Hazardous Material; and the manufacture, processing, distribution, use, coverage, disposal, transportation, storage or handling of any Hazardous

Material) in effect as of the date hereof including, without limitation, (i) the Federal Clean Air Act, 42 U.S.C. §§ 7401 et seq.; (ii) the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §§ 9601 et seq.; (iii) the Federal Emergency Planning and Community Right-to-Know Act, 42 U.S.C. §§ 1101 et seq.; (iv) the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136 et seq.; (v) the Federal Water Pollution Control Act, 33 U.S.C. §§ 1251 et seq.; (vi) the Solid Waste Disposal Act, 42 U.S.C. §§ 6901 et seq.; (vii) the Safe Drinking Water Act, 42 U.S.C. §§ 300f et seq.; and (viii) the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et seq.

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended.

“ ERISA Affiliate ” shall have the meaning set forth in Section  5.15(c) .

“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

“ Exchange Agent ” shall have the meaning set forth in Section  3.2(a) .

“ Exchange Agent Agreement ” shall have the meaning set forth in Section  3.2(a) .

“ Exchange Fund ” shall have the meaning set forth in Section  3.2(a) .

“ Exchange Ratio ” shall have the meaning set forth in Section  3.1(a) .

“ GAAP ” shall have the meaning set forth in Section  4.1 .

“ Governing Documents ” shall have the meaning set forth in Section  2.1(e) .

“ Governmental Authority ” shall mean any national, state, local, county, parish or municipal government, domestic or foreign, any agency, board, bureau, commission, court, tribunal, subdivision, department or other governmental or regulatory authority or instrumentality (including any self-regulatory organization), or any arbitrator in any case that has jurisdiction over Energy or Abraxas, as the case may be, or any of their respective properties or assets.

“ GP ” shall have the meaning set forth in the recitals of this Agreement.

“ GP Board ” shall have the meaning set forth in the recitals to this Agreement.

“ GP Unit ” shall mean the general partnership units of Energy owned by the GP.

“ Hazardous Materials ” shall mean any substance that is designated, defined or classified under any applicable Environmental Laws and Regulations as a hazardous, infectious or toxic substance, chemical, pollutant, contaminant, emission or waste which, or is otherwise regulated or requires removal, remediation or reporting under any applicable Environmental Laws and Regulations.  Hazardous Materials include, without limitation, anything which is:  (i) defined as a “pollutant” pursuant to 33 U.S.C. § 1362(6) as of the date of this Agreement; (ii) defined as a “hazardous waste” pursuant to 42 U.S.C. § 6921 as of the date of this Agreement; (iii) defined as

a “regulated substance” pursuant to 42 U.S.C. § 6991 as of the date of this Agreement; (iv) defined as a “hazardous substance” pursuant to 42 U.S.C. § 9601(14) as of the date of this Agreement; (v) defined as a “pollutant or contaminant” pursuant to 42 U.S.C. § 9601(33) as of the date of this Agreement; (vi) petroleum; (vii) asbestos; (viii) polychlorinated biphenyl; and (ix) radon.

“ HSR Act ” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

“ Indemnification Expenses ” shall have the meaning set forth in Section  7.6(a) .

“ Indemnified Party ” shall have the meaning set forth in Section  7.6(a) .

“ Law ” or “ Laws ” shall mean federal, state, local or foreign laws, statutes, ordinances, rules, regulations, judgments, orders, injunctions, decrees, arbitration awards, agency requirements, licenses and permits of all Governmental Authorities.

“ Letter of Intent ” shall mean that certain letter of intent dated June 18, 2009 by and among Abraxas, Energy and the Unaffiliated Unitholders named therein.

“ Lien ” shall mean any charge, mortgage, pledge, security interest, restriction, claim, lien, or encumbrance.

“ Meeting ” shall have the meaning set forth in Section  7.2(b) .

“ Merger ” shall have the meaning set forth in the recitals to this Agreement.

“ Merger Consideration ” shall have the meaning set forth in Section  3.1(a) .

“ NASDAQ ” shall mean the NASDAQ Capital Market.

“ Nevada Statute ” shall mean Chapter 78 of the Nevada Revised Statutes and Chapter 92A of the Nevada Revised Statutes, each as amended.

“ Omnibus Agreement ” shall mean the Omnibus Agreement, dated as of May 25, 2007, as may be amended from time to time, among Abraxas, the GP, Energy and Abraxas Operating.

“ Outside Determination Date ” shall have the meaning set forth in Section 9.1(e) .

“ Partnership Agreement ” shall mean the Second Amended and Restated Agreement of Limited Partnership of Energy dated as of September 19, 2007.

“ Person ” or “ person ” shall mean any individual, bank, corporation, partnership, limited liability company, association, joint-stock company, business trust or unincorporated organization.

“ Proxy Statement ” shall have the meaning set forth in Section  7.3 .

“ Quarterly Report ” shall have the meaning set forth in Section  5.8(b) .

“ Recapture Amount ” shall have the meaning set forth in Section 6.4 .

“ Release ” shall mean the active or passive spilling, emitting, leaking, pumping, pouring, emptying, discharging, injecting, escaping, leaching, dumping or disposing into the indoor or outdoor environment.

“ Representatives ” shall mean with respect to a Person, its directors, officers, employees, agents and representatives, including any investment banker, financial advisor, attorney, accountant or other advisor, agent or representative.

“ Rights ” shall mean, with respect to any Person, securities or obligations convertible into or exchangeable for, or giving any person any right to subscribe for or acquire, or any options, calls or commitments relating to, equity securities of such Person.

“ SEC ” shall mean the U.S. Securities and Exchange Commission.

“ SEC Filings ” shall have the meaning set forth in Section  5.8(a) .

“ Securities Act ” shall mean the Securities Act of 1933, as amended, and the rules and regulations thereunder.

“ Stock Issuance ” shall mean the issuance of shares of Abraxas Common Stock in the Merger pursuant to this Agreement.

“ Subsidiary ” shall have the meaning ascribed to such term in Rule 1-02 of Regulation S-X under the Securities Act; provided , however , that for purposes of this Agreement (other than in the definition of Abraxas Material Adverse Effect), Energy and Abraxas Operating shall not be deemed to be Subsidiaries of Abraxas.

“ Surviving Entity ” shall have the meaning set forth in Section  2.1(a) .

“ Takeover Law ” shall mean any “ fair price, ” “ moratorium, ” “ control share acquisition, ” “ business combination ” or any other anti-takeover statute or similar statute enacted under state or federal Law.

“ Tax ” or “ Taxes ” means (i) any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, property or windfall profits taxes, environmental taxes, customs duties, franchise, employees’ income withholding, foreign or domestic withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, value added, goods and services, alternative or add-on minimum or other tax, fee, assessment or charge of any kind whatsoever including any interest, penalties or additions to Tax or additional amounts in respect of the foregoing; (ii) any liability for payment of amounts described in clause (i) whether as a result of transferee liability, joint or several liability for being a member of an affiliated, consolidated, combined, unitary or other group for any period, or otherwise by operation of law, and (iii) any liability for the payment of amounts described in clause (i) or (ii) as a result of any tax sharing, tax indemnity or tax allocation agreement or any other express or implied agreement to pay or indemnify any other Person.

“ Tax Calculation ” shall have the meaning set forth in Section 6.4 .

“ Tax Return ” means any return, report, statement, information return or other document (including any schedule or attachment thereto) filed or required to be filed with any taxing authority with respect to the determination, assessment or collection of, or otherwise with respect to, Taxes..

“ Termination Date ” shall have the meaning set forth in Section  9.1(b)(i) .

“ Unaffiliated Unitholders ” shall mean the holders of Energy Common Units as of the date of this Agreement, other than Abraxas and its Affiliates and the officers and directors of Abraxas.

“ Voting Agreement ” shall mean that certain Voting, Registration Rights & Lock-up Agreement dated as of the date hereof by and among Abraxas, Energy and the Unaffiliated Unitholders named therein.

“ VWAP ” shall mean, for any date, the daily volume weighted average price of the Abraxas Common Stock for such date (or the nearest preceding date) on the NASDAQ or such other exchange on which the Abraxas Common Stock is then traded or quoted as reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time).

2.1  The Merger .

(a) The Surviving Entity .  Subject to the terms and conditions of this Agreement, at the Effective Time, Energy shall merge with and into Abraxas, the separate existence of Energy shall cease and Abraxas   shall survive and continue to exist as a Nevada corporation (Abraxas sometimes being referred to herein as the “ Surviving Entity ”).

(b) Effectiveness and Effects of the Merger .  Subject to the satisfaction or waiver of the conditions set forth in Article VIII in accordance with this Agreement, the Merger shall become effective upon the later to occur of the filing in the office of the Secretary of State of the State of Delaware and the Secretary of State of the State of Nevada of a properly executed certificate of merger (the “ Certificate of Merger ”) or such later date and time as may be agreed by Energy and Abraxas in writing and set forth in the Certificate of Merger (the “ Effective Time ”), in accordance with the Delaware LP Act and the Nevada Statute.  The Merger shall have the effects prescribed in the Delaware LP Act and the Nevada Statute.  In no event shall the Effective Time occur later than five (5) Business Days after the satisfaction or waiver of the conditions set forth in Article VIII .

(c) Directors of the Surviving Entity .  Subject to the terms and conditions set forth in Section  7.7 in accordance with this Agreement, the individuals who are the directors of Abraxas   immediately prior to the Effective Time shall be the directors of the Surviving Entity   as of the

Effective Time, until their respective successors are duly elected or appointed and qualified or their earlier death, resignation or removal.

(d) Officers of the Surviving Entity .  The officers of Abraxas   immediately prior to the Effective Time shall be the officers of the Surviving Entity as of the Effective Time, until their respective successors are duly elected or appointed and qualified or their earlier death, resignation or removal.

(e) Governing Documents of the Surviving Entity .  The Articles of Incorporation, Bylaws and other governing documents (the “ Governing Documents ”), as in effect immediately prior to the Effective Time, shall remain the Governing Documents of the Surviving Entity and shall continue in effect until thereafter changed or amended in accordance with the provisions thereof and applicable law.

2.2  Closing .  Subject to the satisfaction or waiver of the conditions as set forth in Article VIII in accordance with this Agreement, the filing of the Certificate of Merger with the Delaware Secretary of State and the Nevada Secretary of State and the closing of the Merger and the other transactions contemplated hereby (the “ Closing ”) shall occur on (a) the first Business Day after the day on which all of the conditions set forth in Article VIII (other than those that by their nature are to be satisfied by actions taken at Closing, but subject to their satisfaction or waiver) shall have been satisfied or waived in accordance with the terms of this Agreement or (b) such other date to which the parties may agree in writing.  The date on which the Closing occurs is referred to as the “ Closing Date .” The Closing of the transactions contemplated by this Agreement shall take place at the offices of Jackson Walker L.L.P., 112 E. Pecan, Suite 2400, San Antonio, Texas 78205, at 10:00 a.m. local time on the Closing Date.

3.1  Merger Consideration .  Subject to the provisions of this Agreement:

(a) By virtue of the Merger and without any action by Abraxas or any holder thereof, at the Effective Time each Energy Common Unit issued and outstanding immediately prior to the Effective Time (other than Energy Common Units held by Abraxas or its Subsidiaries (including the GP)), including Energy Restricted Units and Energy Phantom Units in accordance with Section  3.5(b) , shall be converted into the right to receive the Applicable Number of shares of Abraxas Common Stock (the “ Exchange Ratio ”) which Abraxas Common Stock shall be duly authorized, validly issued, fully paid and non-assessable.  The number of shares of Abraxas Common Stock issued pursuant to this Section  3.1(a) shall be referred to herein as the “ Merger Consideration .”  For purposes of this Agreement, subject to adjustment pursuant to Section  3.4 , the “ Applicable Number ” shall mean the number of validly issued, fully paid and non-assessable shares of Abraxas Common Stock determined by dividing (i) $6.00 by (ii) the average VWAP for the Abraxas Common Stock as reported on NASDAQ for the twenty consecutive trading days ending on the third business day preceding the date of the Abraxas Meeting; provided , however , that in no event shall the Applicable Number be less than 4.25 or greater than 6.

(b) Each GP Unit held by the GP immediately prior to the Effective Time, and each Energy Common Unit held by Abraxas or its Subsidiaries immediately prior to the Effective Time shall be canceled and cease to exist, and no Merger Consideration shall be delivered in respect thereof.

(c) All Energy Common Units, when converted in the Merger shall cease to be outstanding and shall automatically be canceled and cease to exist.  Each holder of a certificate (a “ Certificate ”) previously representing any such Energy Common Units shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration, if any, to be issued in consideration therefor upon the surrender of such Certificates in accordance with Section  3.2 .

3.2  Exchange of Certificates .

(a) Exchange Agent; Deposit of Consideration .  Prior to the Effective Time, Abraxas shall appoint American Stock Transfer and Trust Company, pursuant to an agreement (the “ Exchange Agent Agreement ”), to act as exchange agent (the “ Exchange Agent ”) hereunder.  At or prior to the Effective Time, Abraxas shall deposit or shall cause to be deposited the shares of Abraxas Common Stock to be issued as Merger Consideration with the Exchange Agent for the benefit of the holders of Energy Common Units and which shall be used to make all deliveries of shares of Abraxas Common Stock as required by and pursuant to this Article III .  Any shares of Abraxas Common Stock deposited with the Exchange Agent shall hereinafter be referred to as the “ Exchange Fund .” The Exchange Agent shall, pursuant to irrevocable instructions delivered by Abraxas at or prior to the Effective Time, deliver the Merger Consideration contemplated to be paid for Energy Common Units pursuant to this Agreement, through the Merger, out of the Exchange Fund.  Except as contemplated by this Section  3.2 , the Exchange Fund shall not be used for any other purpose.

(b) Exchange Procedures .  Promptly after the Effective Time and in any event not later than the fifth Business Day following the Effective Time, Abraxas shall instruct the Exchange Agent to mail to each record holder of Certificates (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates (or effective affidavits of loss in lieu thereof) to the Exchange Agent, and shall be in customary form and agreed to by Abraxas and Energy prior to the Effective Time) and (ii) instructions for use in effecting the surrender of the Certificates (or effective affidavits of loss in lieu thereof) in exchange for the Merger Consideration payable in respect of the Energy Common Units represented by such Certificates.  Promptly after the Effective Time, upon surrender of Certificates (or effective affidavits of loss in lieu thereof) for cancellation to the Exchange Agent together with such letters of transmittal, properly completed and duly executed, and such other documents as may be required pursuant to such instructions, the holders of such Certificates (or effective affidavits of loss in lieu thereof) shall be entitled to receive in exchange therefor certificate(s) evidencing shares of Abraxas Common Stock.  No interest shall be paid or accrued on any Merger Consideration.   In the event of a transfer of ownership of Energy Common Units that is not registered in the transfer records of Energy, the Merger Consideration payable in respect of such Energy Common Units may be paid to a transferee if the Certificate representing such Energy Common Units is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer

and the Person requesting such exchange shall pay to the Exchange Agent in advance any transfer or other Taxes required by reason of the delivery of the Merger Consideration in any name other than that of the registered holder of the Certificate surrendered, or shall establish to the satisfaction of the Exchange Agent that such Taxes have been paid or are not payable.  Until surrendered as contemplated by this Section  3.2 , each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Merger Consideration without interest payable in respect of the Energy Common Units represented by such Certificate.

(c) No Further Rights in Energy Common Units .  The Merger Consideration issued in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to such Energy Common Units.

(d) Fractional Shares of Abraxas Common Stock .  No certificates or scrip of the shares of Abraxas Common Stock representing fractional shares of Abraxas Common Stock or book entry credit of the same (after aggregating all fractional shares of Abraxas Common Stock to be received by such holder) shall be issued upon the surrender for exchange of Certificates in the Merger, and such fractional interests will not entitle the owner thereof to vote or to have any rights as a holder of any shares of Abraxas Common Stock.  Notwithstanding any other provision of this Agreement, each holder of Energy Common Units (including Energy Restricted Units and Energy Phantom Units) exchanged in the Merger who would otherwise have been entitled to receive a fraction of a share of Abraxas Common Stock (after taking into account all Certificates delivered by such holder) shall not receive any consideration therefor and all such fractional shares shall be rounded down to the nearest whole share of Abraxas Common Stock.

(e) Termination of Exchange Fund with Respect to Merger .  Any portion of the Exchange Fund that remains undistributed to the holders of Energy Common Units in the Merger after 180 days following the Effective Time shall be delivered to Abraxas upon demand and, from and after such delivery, any former holders of Energy Common Units who have not theretofore complied with this Article III shall thereafter look only to Abraxas for the Merger Consideration payable in the Merger in respect of such Energy Common Units without any interest thereon.  Any amounts remaining unclaimed by holders of Energy Common Units immediately prior to such time as such amounts would otherwise escheat to or become the property of any Governmental Authority shall, to the extent permitted by applicable Law, become the property of Abraxas free and clear of any Liens, claims or interest of any Person previously entitled thereto.

(f)   No Liability .  None of Abraxas, Energy or the Surviving Entity shall be liable to any holder of Energy Common Units for any shares of Abraxas Common Stock (or distributions with respect thereto) from the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

(g) Lost Certificates .  If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Energy or Abraxas, the posting by such Person of a bond, in such reasonable amount as Energy or Abraxas may direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent shall pay in exchange for

such lost, stolen or destroyed Certificate the Merger Consideration payable in respect of the Energy Common Units represented by such lost, stolen or destroyed Certificate.

(h) Withholding .  Each of Energy, Abraxas, the Surviving Entity and the Exchange Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Energy Common Units such amounts as Energy, Abraxas, the Surviving Entity or the Exchange Agent is required to deduct and withhold under the Code or any provision of state, local, or foreign Tax Law, with respect to the making of such payment.  To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of Energy Common Units in respect of whom such deduction and withholding was made by Energy, Abraxas, the Surviving Entity or the Exchange Agent, as the case may be.

3.3  Rights As Unitholders; Unit Transfers .  From and after the Effective Time, holders of Energy Common Units shall cease to be, and shall have no rights as, limited partners of Energy, and shall have no rights in respect of Energy Common Units, other than the right to receive the consideration provided under this Article III .  After the Effective Time, there shall be no transfers on the unit transfer books of Energy of the Energy Common Units.

3.4  Anti-Dilution Provisions .  In the event of any subdivisions, reclassifications, recapitalizations, splits, combinations or dividends in the form of equity interests with respect to Abraxas Common Stock or the Energy Common Units, the number of shares of Abraxas Common Stock to be issued in the Merger and the Exchange Ratio will be correspondingly adjusted.

3.5  Options, Phantom Units and Restricted Units .

(a) At the Effective Time, automatically and without any action on the part of the holder thereof, Abraxas will assume each Energy Unit Option which had previously been approved under the Energy LTIP to be granted upon the consummation of initial public offering of the Energy Common Units, and such Energy Unit Option will become an option (i) to purchase that number of shares of Abraxas Common Stock (calculated on an aggregate basis and rounded down to the nearest whole share of Abraxas Common Stock) obtained by multiplying the number of Energy Common Units issuable upon the exercise of such Energy Unit Option by the Exchange Ratio, (ii) at an exercise price per share (calculated on an aggregate basis and rounded up to the nearest whole penny) equal to the closing price of the Abraxas Common Stock on the NASDAQ on the date on which the Effective Time occurs, and (iii) otherwise upon the terms and conditions of the Abraxas LTIP (each an “ Abraxas Stock Option ” and, collectively, “ Abraxas Stock Options ”).

(b) At the Effective Time, all outstanding Energy Restricted Units and Energy Phantom Units previously granted shall be converted pursuant to Section  3.1(a) , at the Exchange Ratio, into shares of Abraxas Restricted Stock pursuant to the Abraxas LTIP.  Any fractional share of Abraxas Restricted Stock shall be rounded down to the nearest whole share of Abraxas Common Stock.  Each share of Abraxas Common Stock in respect of which an Energy Restricted Unit or Energy Phantom Unit, respectively, was so assumed and converted shall be subject to, and shall vest upon, the terms and conditions that are the same as those of the

applicable Energy Restricted Unit or Energy Phantom Unit.  Promptly after the Effective Time, Abraxas will provide each holder of Energy Restricted Units and Energy Phantom Units with a notice describing the assumption and conversion of such awards.

(c) With the exception of those Persons who hold Energy Restricted Units and Energy Phantom Units, no Person shall have any right under any plan, program, agreement or arrangement with respect to Energy Common Units, or for the issuance or grant of any right of any kind, contingent or accrued, to receive benefits or compensation measured by the value of a number of Energy Common Units at and after the Effective Time.

(d) Abraxas will take all corporate actions necessary to reserve for issuance a sufficient number of shares of Abraxas Common Stock for delivery upon exercise of Abraxas Stock Options in respect of the Energy Unit Options that Abraxas assumes under Sections  3.5(a) and 3.5(b) .

(e) Abraxas will provide for the grant of assumed and converted equity compensation awards described above in this Section  3.5 under the Abraxas LTIP.

Energy hereby represents and warrants to Abraxas that:

4.1 Organization and Qualification .  Energy is a limited partnership duly organized and validly existing in good standing under the Laws of the State of Delaware.  Energy has the requisite limited partnership power and authority to own or lease its properties and to carry on its business as it is now being conducted and is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character of the properties owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified would not, individually or in the aggregate, have an Energy Material Adverse Effect (as defined below).  When used in connection with Energy or Abraxas Operating, the term “ Energy Material Adverse Effect ” shall mean any state of facts, circumstance, change, event, occurrence or effect that is materially adverse to the business, properties, financial condition or results of operations of Energy and Abraxas Operating, taken as a whole, except that none of the following (or the effects thereof) will be deemed to constitute, and none of the following will be taken into account in determining whether there has been or if there is reasonably likely to be, an Energy Material Adverse Effect: (i) general economic conditions, changes in securities markets (including any disruption thereof), regulatory or political conditions, including any engagement in hostilities, whether or not pursuant to the declaration of a national emergency or war, the occurrence of any military or terrorist attack or a general economic recession, natural disasters or other force majeure events, in each case in the United States or elsewhere, except to the extent that such conditions, changes or events affect Energy in a materially disproportionate and adverse manner when compared to companies of similar size operating in the same industry or market as Energy; (ii) changes in or events or conditions generally affecting the oil and gas exploration and production industry (including changes in commodity prices and general market prices), except to the extent that such conditions, changes

or events affect Energy in a materially disproportionate and adverse manner when compared to companies of similar size operating in the same industry or market as Energy; (iii) changes in Laws or U.S. generally accepted accounting principles (“ GAAP ”) or interpretations thereof, except to the extent that such changes affect Energy in a materially disproportionate and adverse manner when compared to companies of similar size operating in the same industry or market as Energy; (iv) the announcement or pendency of this Agreement, any actions taken in compliance with this Agreement or the consummation of the Merger; (v) any failure by Energy to meet estimates of revenues or earnings for any period ending after the date of this Agreement (provided that the underlying causes of any such failure may be considered in determining whether an Energy Material Adverse Effect has occurred); or (vi) the taking of any action (or omitting to take any action) required or contemplated by this Agreement or the taking of any action (or omitting to take any action) that Abraxas has requested or to which Abraxas has consented.

4.2 Subsidiaries .  The only subsidiary of Energy is Abraxas Operating.  Abraxas Operating (i) is duly organized and validly existing under the Laws of the State of Texas, (ii) has the requisite limited liability company power and authority to own or lease its properties and to carry on its business as it is now being conducted and (iii) is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character of the properties owned or leased by it makes such licensing or qualification necessary, in each case, except as would not, individually or in the aggregate, have an Energy Material Adverse Effect.  Other than with respect to Abraxas Operating, Energy does not directly or indirectly own any equity interest in, or any interest convertible into or exchangeable or exercisable for, any equity interest in, any corporation, partnership, joint venture or other business entity, other than equity interests held for investment that are not, in the aggregate, material to Energy.  All of Energy’s equity interests in Abraxas Operating, whether directly or indirectly owned, are held free and clear of any Lien (other than in favor of Energy or Abraxas Operating), no equity interests of Abraxas Operating are or may become required to be issued by reason of any Rights, there are no contracts, commitments, understandings or arrangements by which Abraxas Operating is or may be bound to sell or otherwise transfer any equity interests of Abraxas Operating, there are no contracts, commitments, understandings, or arrangements relating to Energy’s rights to vote or to dispose of such equity interests, and all of the equity interests of Abraxas Operating held by Energy are fully paid and non-assessable and are owned by Energy free and clear of any Liens.

4.3 Capitalization .

(a) As of the date of this Agreement, there were 11,462,149 Energy Common Units issued and outstanding (51,900 of which were Energy Restricted Units), and all of such Energy Common Units and the member interests represented thereby were duly authorized and validly issued in accordance with the Partnership Agreement and are fully paid (to the extent required under the Partnership Agreement) and non-assessable (except as such nonassessability may be affected by Sections 17-607 and 17-804 of the Delaware LP Act).

(b) As of the date of this Agreement, none of Energy’s equity securities are authorized and reserved for issuance, Energy  does not have any Rights issued or outstanding with respect to its equity securities, and Energy  does not have any commitment to authorize, issue or sell any such equity securities or Rights.  Since June 1, 2009, Energy has not issued any

equity securities or Rights in respect thereof or reserved any interests of Energy’s equity securities for such purposes.  There are no outstanding contractual obligations of Energy or Abraxas Operating to repurchase, redeem or otherwise acquire any equity interests of Energy or Abraxas Operating.

(c) As of the date of this Agreement, there were 248,950 Energy Common Units that were issuable and reserved for issuance upon exercise of Energy Unit Options and 47,255 Energy Phantom Units issued and outstanding.

(d) Other than with respect to the Energy LTIP, neither Energy nor Abraxas Operating (i) sponsors, maintains, directly contributes or is obligated to directly contribute to, any Benefit Plan for the benefit of any employee, former employee, director or former director of Energy or Abraxas Operating or (ii) otherwise provides or is obligated to provide benefits to any current, former or future employee, officer or director of Energy or Abraxas Operating or to any beneficiary or dependent thereof under any Benefit Plan.  For purposes of the foregoing, a “ Benefit Plan ” means any material “employee benefit plan” as defined in Section 3(3) of ERISA, whether or not subject to ERISA, material employment, consulting, bonus, incentive or deferred compensation, vacation, stock option or other equity-based, severance, termination, retention, change of control, profit-sharing, fringe benefit or other similar material plan, program, agreement or commitment, whether written or unwritten; provided , however , that “ Benefit Plan ” shall not include any employee benefit plan that is sponsored by Abraxas.

4.4 Authority; Due Authorization; Binding Agreement; Approval .

(a) Energy has all requisite limited partnership power and authority to enter into this Agreement and to perform its obligations under this Agreement and the Voting Agreement subject, with respect to the Merger, to the adoption of this Agreement by the affirmative vote of the Energy Unitholders to the extent required by the Partnership Agreement and applicable Law.

(b) The execution, delivery and performance of this Agreement and the Voting Agreement by Energy and the consummation by Energy of the transactions contemplated hereby and thereby have been duly and validly authorized by all requisite limited partnership action on the part of Energy (other than receipt of the Energy Unitholder Approval and the filing of appropriate merger documents as required by the Delaware LP Act and the Nevada Statute).

(c) This Agreement and the Voting Agreement have been duly executed and delivered by Energy and, assuming the due authorization, execution and delivery hereof and thereon by the parties thereto other than Energy, each constitutes a valid and binding obligation of Energy, enforceable against Energy in accordance with its terms, except as limited by bankruptcy, insolvency, moratorium, fraudulent transfer, reorganization and other Laws of general applicability relating to or affecting the rights or remedies of creditors and by general equitable principles (whether considered in a proceeding in equity or at Law).

4.5 GP Board Recommendation; Opinion of Energy Financial Advisor .

(a) At a meeting duly called and held, the Energy Committee determined by unanimous vote of all of its members that this Agreement and the transactions contemplated hereby are advisable, fair and reasonable to and in the best interests of the Unaffiliated

Unitholders and Energy, and resolved to recommend that the full GP Board adopt this Agreement, approve the transactions contemplated hereby, and recommend the adoption of this Agreement and approval of the transactions contemplated hereby by the Energy Unitholders.

(b) At a meeting duly called and held, the GP Board, by unanimous vote of all of its members other than Robert L.G. Watson and Ralph F. Cox, who recused themselves, (i) determined that this Agreement and the transactions contemplated hereby are advisable, fair and reasonable to and in the best interests of the Unaffiliated Unitholders and Energy and (ii) approved and adopted this Agreement and determined to recommend its adoption and approval by the Energy Unitholders.

(c) Stifel, Nicolaus & Company, Incorporated (the “ Energy Financial Advisor ”) has orally delivered to the Energy Committee its opinion, the written form of which, dated the same date, to be delivered subsequently, to the effect that, as of the date of such opinion and based upon and subject to the matters set forth therein, the Exchange Ratio is fair, from a financial point of view, to the holders of Energy Common Units.  A copy of such opinion shall be provided to the Abraxas Special Committee, solely for informational purposes and subject to the terms of the Energy Financial Advisor’s engagement letter agreement, promptly following its delivery in written form to the Energy Committee.

4.6 No Violation; Consents .

(a) The execution and delivery of this Agreement and the Voting Agreement by Energy does not, and consummation by Energy of the transactions contemplated hereby and thereby will not, (i) violate the certificate of formation or the Partnership Agreement of Energy, (ii) constitute a breach or violation of, or a default (or an event which, with notice or lapse of time or both, would constitute such a default) under any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument (collectively, “ Contracts ”) to which Energy or Abraxas Operating is a party or by which any of them or any of their respective properties are bound, (iii) (assuming that the consents and approvals referred to in Section  4.6(b) are duly and timely made or obtained and that the Energy Unitholder Approval is obtained) violate any Law applicable to Energy or Abraxas Operating or any of their properties, (iv) result in the creation or imposition of any Lien upon any property of Energy or Abraxas Operating pursuant to the agreements and instruments referred to in clause (ii), or (v) cause the transactions contemplated by this Agreement to be subject to Takeover Laws, except, in the case of clauses (ii), (iii), (iv), or (v), for such conflicts, breaches, violations, defaults, Liens, or subjection, that would not, individually or in the aggregate, have an Energy Material Adverse Effect.

(b) Except for (i) expiration or termination of any waiting period applicable to the transactions contemplated by this Agreement under the HSR Act, (ii) compliance with any applicable requirements of the Securities Act, the Exchange Act and any other applicable U.S. state or federal securities Laws, (iii) filing or recordation of merger or other appropriate documents as required by the Delaware LP Act, the Nevada Statute or applicable Law of other states in which Energy is qualified to do business, (iv) any governmental consents necessary for transfers of permits and licenses and (v) such other authorizations, consents, approvals or filings the failure of which to obtain or make would not, individually or in the aggregate, have an Energy Material Adverse Effect, no authorization, consent or approval of or filing with any

Governmental Authority is required to be obtained or made by Energy or any ultimate parent entity or controlling person of Energy for the execution and delivery by either of them of this Agreement or the consummation by either of them of the transactions contemplated hereby.

Abraxas hereby represents and warrants to Energy that, except as otherwise set forth in the SEC Filings  (excluding any forward-looking statements included therein or any statements of a cautionary nature that are not historical facts in any risk factor section of such documents) filed with the SEC prior to the date of this Agreement:

5.1 Organization and Qualification .  Abraxas is a corporation duly incorporated and validly existing in good standing under the Laws of the State of Nevada.  Abraxas has the requisite corporate power and authority to own or lease its properties and to carry on its business as it is now being conducted and is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character of the properties owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified would not, individually or in the aggregate, have an Abraxas Material Adverse Effect (as defined below).  When used in connection with Abraxas or any of its Subsidiaries, the term “ Abraxas Material Adverse Effect ” shall mean any state of facts, circumstance, change, event, occurrence or effect that is materially adverse to the business, properties, financial condition or results of operations of Abraxas and its Subsidiaries (including Energy and Abraxas Operating), taken as a whole, except that none of the following (or the effects thereof) will be deemed to constitute, and none of the following will be taken into account in determining whether there has been or if there is reasonably likely to be, an Abraxas Material Adverse Effect: (i) general economic conditions, changes in securities markets (including any disruption thereof), regulatory or political conditions, including any engagement in hostilities, whether or not pursuant to the declaration of a national emergency or war, the occurrence of any military or terrorist attack or a general economic recession, natural disasters or other force majeure events, in each case in the United States or elsewhere, except to the extent that such conditions, changes or events affect Abraxas in a materially disproportionate and adverse manner when compared to companies of similar size operating in the same industry or market as Abraxas; (ii) changes in or events or conditions generally affecting the oil and gas exploration and production industry (including changes in commodity prices and general market prices), except to the extent that such conditions, changes or events affect Abraxas in a materially disproportionate and adverse manner when compared to companies of similar size operating in the same industry or market as Abraxas; provided , however , that the bankruptcy of Abraxas shall be considered to be an Abraxas Material Adverse Effect; (iii) changes in Laws or GAAP or interpretations thereof, except to the extent that such changes affect Abraxas in a materially disproportionate and adverse manner when compared to companies of similar size operating in the same industry or market as Abraxas; (iv) the announcement or pendency of this Agreement, any actions taken in compliance with this Agreement or the consummation of the Merger; (v) any failure by Abraxas to meet estimates of revenues or earnings for any period ending after the date of this Agreement (provided that the underlying causes of any such failure may be considered in determining whether an Abraxas Material Adverse Effect has occurred);

(vi) the taking of any action (or omitting to take any action) required or contemplated by this Agreement or the taking of any action (or omitting to take any action) that Energy has requested or to which Energy has consented; or (vii) changes in the price or trading volume of Abraxas’ stock (provided that the underlying causes of any such changes may be considered in determining whether an Abraxas Material Adverse Effect has occurred).

5.2 Subsidiaries .  Each Subsidiary of Abraxas (i) is duly organized and validly existing under the Laws of its jurisdiction of organization, (ii) has the requisite corporate or other business entity power and authority to own or lease its properties and to carry on its business as it is now being conducted and (iii) is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character of the properties owned or leased by it makes such licensing or qualification necessary, in each case, except as would not, individually or in the aggregate, have an Abraxas Material Adverse Effect.  Other than with respect to Abraxas’ Subsidiaries, Abraxas does not directly or indirectly own any equity interest in, or any interest convertible into or exchangeable or exercisable for, any equity interest in, any corporation, partnership, joint venture or other business entity, other than equity interests held for investment that are not, in the aggregate, material to Abraxas.  All of the equity interests Abraxas owns in each of its Subsidiaries, whether directly or through Abraxas’ Subsidiaries, are held free and clear of any Lien (other than in favor of Abraxas or any of its Subsidiaries), no equity interests of any of Abraxas’ Subsidiaries are or may become required to be issued by reason of any Rights, there are no contracts, commitments, understandings or arrangements by which any of Abraxas’ Subsidiaries is or may be bound to sell or otherwise transfer any equity interests of any such Subsidiaries, there are no contracts, commitments, understandings, or arrangements relating to Abraxas’ rights to vote or to dispose of such equity interests, and all of the equity interests of each such Subsidiary held by Abraxas or its Subsidiaries are fully paid and non-assessable and are owned by Abraxas or its Subsidiaries free and clear of any Liens.

5.3 Capitalization .

(a) The authorized capita