Grey Wolf Terminates Merger Agreement

Grey Wolf, Inc. announced that its proposed merger with Basic Energy Services, Inc. did not receive sufficient votes from Grey Wolf shareholders to approve the transaction at its special meeting of shareholders held today. As a result, Grey Wolf and Basic terminated their merger agreement.

In light of this development, the Board of Directors of Grey Wolf plans to review the Company’s alternatives for enhancing shareholder value. This review will include an update to the Company’s existing strategic plan and will encompass consideration of continued internal growth by remaining independent, acquisitions, mergers, sale of the Company, strategic alliances, joint ventures and financial alternatives.

The Board has engaged UBS Investment Bank as its independent financial advisor to assist the Company in conducting this review.

Thomas P. Richards, Chairman, President and CEO of Grey Wolf, said, “Grey Wolf remains fully committed to enhancing shareholder value. After thorough consideration, Grey Wolf’s Board believed that the addition of Basic’s complementary business and assets would have been an excellent strategic fit for us and would have created significant value. The Board will now continue to consider other alternatives to enhance shareholder value and it will do so in an environment of strong commodity prices, a related strengthening in the onshore U.S. lower 48 drilling market and the potential inherent in Grey Wolf’s asset base.”

The Company cautions shareholders that there is no assurance that the review will result in any specific transaction and no timetable has been set for its completion. The Company does not intend to disclose developments relating to this review unless and until its Board of Directors approves a specific agreement or transaction.

The Company will also take a pre-tax charge to earnings of approximately $17.0 million (or approximately $.05 per diluted share) during the third quarter of this year as a result of the shareholder vote and related termination of the merger agreement.