Grey Wolf Exploration Inc.
TSX : GWE

Grey Wolf Exploration Inc.

November 06, 2007 19:22 ET

Grey Wolf Announces Summary Third Quarter 2007 Results

CALGARY, ALBERTA--(Marketwire - Nov. 6, 2007) -

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Grey Wolf Exploration Inc. ("Grey Wolf") (TSX:GWE) today reported summary financial and operating results for the quarter and nine months ended September 30, 2007. The complete financial statements and management's discussion and analysis for the related periods are available at www.sedar.com or the corporate website at www.greywolf.ca.

The third quarter of 2007 resulted in:

- Average production of 2,352 barrels of oil equivalent per day ("boe/d")

- Revenue of $9.1 million

- EBITDA of $4.1 million

- Funds flow from operations of $3.5 million - $0.10 per share diluted(a)

- Net loss of $441 thousand - $(0.01) per share diluted

The nine months ended September 30, 2007 resulted in:

- Average production of 2,071 boe/d

- Revenue of $26.3 million

- EBITDA of $13.0 million

- Funds flow from operations of $11.4 million - $0.35 per share diluted(a)

- Net loss of $131 thousand - $0.00 per share diluted

Average field estimated production for the month of October 2007 was 2,565 boe per day.

During the third quarter of 2007, the Company recorded a net loss of $0.4 million compared to net income of $0.6 million in the same period last year. Net income for the first nine months of 2007 was a loss of $0.1 million, which was significantly lower than the $3.7 million net income reported in the comparable period in 2006. The decrease in net income was primarily due to lower production as a result of the curtailment issues related to third party facilities, the divestiture of production in the Caroline area in August 2006 and higher operating expenses.

The calculation of barrels of oil equivalent ("boe") is based on a conversion ratio of six thousand cubic feet of natural gas to one barrel of oil to estimate relative energy content and does not represent a value equivalency - boes may be misleading, particularly if used in isolation.

NOTES

(a) "Funds flow from operations", "Funds flow - basic", and "Funds flow - diluted", are not measures that have any standardized meaning prescribed by Canadian GAAP and are considered non-GAAP measures. Therefore, these measures may not be comparable to similar measures presented by other issuers. These measures have been described and presented in this media release in order to provide shareholders and potential investors with additional information regarding the Company's liquidity and its ability to generate funds to finance its operations.

Capital expenditures of $17.3 million in the third quarter of 2007 included the drilling of 5 gross (3.3 net) wells, achieving an overall drilling success ratio of 100%. During the first nine months of 2007, the Company drilled 10 gross (7.1 net) wells compared to 21 gross (12.0 net) wells in 2006. Capital expenditures totalled $42.7 million during the period.

In September, the Company acquired 74 sections of land in the Petitot area of northwestern Alberta, providing the foundation for a high impact exploratory program.

During September/October of 2007, the Company drilled an exploratory well in its Widewater area. Although the primary target was not achieved, valuable geological data was attained. The well was dry and will be abandoned. Follow-up drilling can be anticipated.

We have completed an assessment of the impact the recently proposed changes to the Alberta royalty system. Grey Wolf is pleased to report that our internal analysis of our main plays, Pouce Coupe, Caroline and Petitot, shows these projects to still result in acceptable economics under the proposed new royalties.

Commented Bob Watson, Chairman and CEO, "With potential decreased industry activity leading to reduced costs of services, the nominal decline in rates of return we are calculating due to higher royalty may be offset by lower costs. Our estimate of net asset value calculated with the proposed new royalties on last year's reserves shows a reduction of approximately 6 percent, which we feel has been more than offset by this year's reserve additions. In any case, our internal calculation of net asset value is still well in excess of $4 per share."

Grey Wolf is an independent Alberta-based, junior oil and natural gas company involved in the development and production of natural gas and crude oil in the Western Canadian Sedimentary Basin. Its common shares trade on the Toronto Stock Exchange under the symbol "GWE".

Forward-Looking Statements - Certain statements contained in this Annual Information Form constitute forward-looking statements. These statements relate to future events or our future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. We believe the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this Annual Information Form should not be unduly relied upon. These statements speak only as of the date of this Annual Information Form. We assume no obligation to revise or update these statements except as required pursuant to applicable securities laws.

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