Grey Wolf Announces 2006 Capital Program of $55 Million

Grey Wolf Exploration has authorized increased 2005 capital spending to a total of $38 million from the previously approved $32 million. The revised expenditures consist of drilling 23 gross (17.5 net) wells and the recompletion of 14 gross (11.3 net) wells during 2005, as well as covering cost overruns and escalating costs of third party services.

For 2006, Capital Expenditures of $55 million are planned. This aggressive program represents a 45 percent increase over 2005 and demonstrates our ability to add to our portfolio of drilling opportunities. During the year, plans include the drilling of a total 33 gross (21.7 net) wells, the recompletion of 2 gross (0.8 net) wells and the pursuit of strategic property acquisitions. A total of $49.6 million has been allocated to drilling, completions and facility expenditures consisting of 6 gross (3.0 net) wells in the Caroline area, 4 gross (4.0 net) wells in the Knopcik area, 12 gross (6.4 net) wells in the Pouce Coupe area, 7 gross (6.0 net) wells in the Valhalla area, 2 gross (2.0 net) wells in the Widewater area and 2 gross (0.3 net) wells in the Ladyfern area.

"During 2006, we will continue to add to our reserve base of high quality, liquids-rich natural gas and light crude oil that consistently delivers top quartile netbacks and secures long-term cash flow. We are forecasting Grey Wolf's 2006 average daily production to be in excess of 3,200 boe per day" stated Robert L. G. Watson, Chairman and Chief Executive Officer of the Company. "Our 2005 activities have increased our portfolio of internally-generated investment opportunities and combined with our financial strength, Grey Wolf is well positioned to continue to deliver healthy growth to its shareholders."