Grey Wolf Exploration Inc.

Grey Wolf Exploration Inc.

January 31, 2007 17:00 ET

Grey Wolf Exploration Inc. Provides Operations Update

CALGARY, ALBERTA--(CCNMatthews - Jan. 31, 2007) -


Grey Wolf Exploration Inc. (TSX:GWE) ("Grey Wolf") announced today that it has received approval from the Alberta Energy Utilities Board for the remaining application to downspace the majority of its land in the Pouce Coupe and Valhalla areas of Alberta. Grey Wolf can now proceed with drilling four wells per section of land to the Doig and Montney formations instead of the previous one well per section. The Company believes that it now has over 40 net locations to drill within these areas.

Grey Wolf has also been advised that construction of the Duke pipeline to serve the Pouce Coupe and Valhalla areas is still on schedule, with construction expected to commence during February. The Company holds firm capacity of eight million cubic feet of gas per day in this eight inch pipeline and processing plant, with the right of first refusal on any additional firm capacity requested by others in the pipeline and plant. It is anticipated that the pipeline will be completed during April 2007.

The Company's winter drilling program in the Pouce Coupe/ Valhalla area has commenced with the spudding of two wells over the past weekend.

Grey Wolf's current production is approximately 1,900 barrels of oil equivalent per day ("boe/d") with approximately an additional 900 boe/d curtailed, the majority of which will be back on production once the Duke Pipeline has been completed.

In addition, two new producing areas are scheduled to come on-stream in the near future, adding approximately 400 boe/d to production. This estimated production increase is not included in the curtailed volumes.

"We look forward to the end of the curtailments which have plagued the Company over the past nine months" stated Robert Watson, Chairman and Chief Executive Officer of Grey Wolf. "The significant hike in production levels expected during the second quarter of 2007, combined with our expanded project inventory and strong financial position, serves us well for the upcoming year."

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 information set forth in this document, including management's assessment of Grey Wolf's future plans and operations, contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Grey Wolf's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Grey Wolf's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements. No assurance can be given that any of the events anticipated will transpire or occur, or if any of them do so, what benefits Grey Wolf will derive from them. Grey Wolf disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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.

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