Grey Wolf Exploration Inc.
TSX : GWE

Grey Wolf Exploration Inc.

June 05, 2007 16:31 ET

Grey Wolf Increases 2007 Capital Expenditure Program to $46.5 Million and Updates Guidance

CALGARY, ALBERTA--(Marketwire - June 5, 2007) -

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Grey Wolf Exploration Inc. ("Grey Wolf") (TSX:GWE) today announced that while their third party processing arrangements are up and running on schedule, fiscal 2007 is still distorted by the curtailment of production in the first quarter, resulting in annual average production rates being lower than our actual capability. "Grey Wolf wishes to re-state the fact that operating difficulties experienced in 2006 and the first quarter of 2007 are now finally behind us" said Mr. Bob Watson, Chief Executive Officer of Grey Wolf. "Our business plan for the future sees excellent potential for growth".

Grey Wolf's business strategy for the next three years is to accelerate drilling on the low risk development program in Pouce/Valhalla, where new arrangements with third party processors allow for relatively unrestricted production. This accelerated drilling will provide a background of steady growth. At the same time, Grey Wolf will add a portfolio of new exploratory drilling in order to add to the baseline growth and provide for creation of new producing properties. "Our properties at Pouce/Valhalla give us over three years of steady, low risk drilling, a position most junior companies would envy", said Mr. Bob Watson. "Significant exploration activities are already in place for later in 2007 and the winter of 2007-2008, utilizing projects developed in-house from recent seismic programs. We are excited by the quality of these exploratory projects and their potential impact on our growth".

Grey Wolf's shift in strategy yields steady growth, with the added potential for major gains from high impact exploration success. Six new exploratory locations have already been identified. Drilling on one strong multi-zone prospect will commence as soon as ground conditions permit in 2007.

Excluding the first quarter of 2007 where we experienced third party plant production curtailment (1,000 boe/d), we expect production for the remaining three quarters to average 2,500 barrels of oil equivalent per day ("boe/d"). Consequently, 2007 average production is forecast to be approximately 2,300 boe/d. An increase in capital spending for 2007 to $46.5 million was approved by the Grey Wolf Board of Directors today.

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.

Grey Wolf is an Alberta-based 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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