Filed by Abraxas Petroleum Corporation
                                                   (Commission File No. 0-19118)
                          Pursuant to Rule 425 Under the Securities Act of 1933,
                                                                     as amended,
                                        And Deemed Filed Pursuant to Rule 14a-12
                                      Under the Securities Exchange Act of 1934,
                                                                     as amended.
                                    Subject Company:  Grey Wolf Exploration Inc.
                                                        (no Commission File No.)

                                  NEWS RELEASE

            ABRAXAS UPDATES SUCCESSFUL CANADIAN AND U. S. OPERATIONS

SAN ANTONIO,  TX (Sept.  10, 2001) - Abraxas  Petroleum  Corporation  (AMEX:ABP)
Chairman and CEO, Bob Watson,  commented on the Company's current  operations in
the Oates S.W.  field,  in the Montoya trend in west Texas,  and the  continuing
success  of its  drilling  efforts  in the  Caroline  and Pouce  Coupe  areas in
Alberta, Canada.

"In Canada,  the Company has drilled seven successful  wells,  none of which are
currently  booked  as proved  or  probable  reserves  by the  Company's  outside
engineering firms. Abraxas expects reserves of 3-5 Bcfe (gross) per well and has
identified over forty additional locations in the Caroline and Pouce Coupe areas
based on the recent drilling and the 3-D seismic surveys  completed in each area
this past winter.  In the Pouce Coupe area a second well is online producing 2.2
MMcfpd  and 60 Bopd  (gross).  A third  well was tested at 5 MMcfpd and 180 Bopd
(gross) and should be on production  later this month.  Two additional wells are
awaiting completion and one well is currently drilling.  In Caroline,  two wells
are being completed and one well is currently drilling.  The Company has one rig
under contract in each area and anticipates drilling one well per month in Pouce
Coupe and one well  every  six weeks in  Caroline  for the  foreseeable  future.
Abraxas has an average 85% working interest in the seven drilled wells but has a
100% working interest in the majority of the subsequent drilling locations.

In the S.W. Oates area of west Texas, the Company recently commenced  operations
to re-enter an existing  wellbore,  the Hudgins 34 #1.  Reentering  the existing
well  will  save  approximately  half of the cost of a new well  and  allow  the
Company to test the Montoya  formation in a cost effective  manner.  The well is
currently  drilling  vertically at approximately  13,000 feet and is expected to
drill  horizontally  at a  depth  of  13,400  feet.  Abraxas  has  finished  the
evaluation of its recently  acquired 3-D seismic and has identified as many as 9
potential  locations on its 100% working  interest  acreage.  In addition to the
Montoya formation  potential,  there is a shallower Devonian formation that will
be evaluated.

In the Montoya joint participation area with EOG Resources  (NYSE:EOG),  the two
wells currently on production are producing a combined 11 MMcfpd (gross) and EOG
expects to spud two additional wells before year end."

THIS PRESS RELEASE DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION  OF AN
OFFER TO EXCHANGE THE SECURITIES OF ABRAXAS FOR THE SECURITIES OF GREY WOLF. ANY
SUCH OFFER OR SOLICITATION WILL BE SUBJECT TO CERTAIN  CUSTOMARY  CONDITIONS AND
WILL BE MADE ONLY BY ABRAXAS'  PROSPECTUS AND OTHER  EXCHANGE  OFFER  MATERIALS,
WHICH  HAVE  BEEN  FILED  WITH  THE SEC AND  HAVE  BEEN  MAILED  TO GREY  WOLF'S
STOCKHOLDERS. GREY WOLF'S STOCKHOLDERS ARE URGED TO READ THESE DOCUMENTS BECAUSE
THEY CONTAIN  IMPORTANT  INFORMATION  ABOUT THE OFFER.  THE  DOCUMENTS  ARE ALSO
AVAILABLE  AT NO CHARGE FROM THE SEC'S WEB SITE,  WWW.SEC.GOV,  AND FROM ABRAXAS
PETROLEUM CORPORATION AT 500 NORTH LOOP 1604 EAST, SUITE 100, SAN ANTONIO, TEXAS
78232.

Abraxas Petroleum  Corporation is a San Antonio-based  crude oil and natural gas
exploitation and production company that also processes natural gas. The Company
operates in Texas, Wyoming and western Canada. For additional  information about
the Company,  please visit our web site,  www.abraxaspetroleum.com  for the most
current  and  updated  information.  The web site is  updated  daily in order to
comply with the SEC Regulation FD (Fair Disclosure).

Safe Harbor for  forward-looking  statement:  Statements in this release looking
forward in time involve  known and unknown  risks and  uncertainties,  which may
cause the Company's actual results in future periods to be materially  different
from any future performance suggested in this release. Such factors may include,
but may not be  necessarily  limited to,  changes in the prices  received by the
Company for crude oil and natural gas. In addition,  the Company's  future crude
oil and natural gas production is highly  dependent upon the Company's  level of
success in  acquiring  or finding  additional  reserves.  Further,  the  Company
operates in an industry  sector where the value of securities is highly volatile
and may be  influenced  by  economic  and other  factors  beyond  the  Company's
control.  In the context of  forward-looking  information  provided  for in this
release,  reference is made to the  discussion  of risk factors  detailed in the
Company's filing with the Securities and Exchange  Commission during the past 12
months.

FOR MORE INFORMATION CONTACT:
Janice Herndon/Manager Corp. Communications
Telephone 210-490-4788
jherndon@abraxaspetroleum.com
www.abraxaspetroleum.com