Grey Wolf Exploration Inc.
TSX : GWE

Grey Wolf Exploration Inc.

July 22, 2005 08:50 ET

Grey Wolf Announces Record Second Quarter and Updates Drilling Program

CALGARY, ALBERTA--(CCNMatthews - July 22, 2005) -

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UNITED STATES

Grey Wolf Exploration Inc. (TSX:GWE) ("Grey Wolf") announced today record production levels for the second quarter of 2005, averaging 2,128 barrels of oil equivalent ("boe") per day, a 24 percent increase over the 1,718 boe per day recorded during the second quarter of 2004. This increase was achieved despite a very early spring break up and unprecedented heavy rainfall and flooding which extended road bans in its areas of operations until the second week of July. Daily production volumes by area (on a boe basis) are detailed below:



Second Quarter
2005 Sales Volume

Caroline 627
Widewater 571
Knopcik 490
Pouce Coupe 140
Overriding Royalty Properties 135
Other 165
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2,128
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Note: boe is calculated with natural gas converted at 6 Mcf of natural
gas per barrel of oil and is based on an energy equivalency
conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead.


The jump in production levels, along with strong commodity prices produced a 105 percent increase in second quarter cash flow to approximately $6.3 million over the $3.1 million posted for the same period in 2004. Net earnings rose sharply to approximately $2.2 million during the second quarter of 2005, compared to $0.01 million for the comparable period in 2004. Detailed second quarter and six months' results are scheduled to be released after market close on August 8, 2005.

Drilling Update:

Pouce 12-32-077-10 W6M (GWE 12.5% Working Interest) The Doig zone was successfully perforated, stimulated and completed and has averaged 230 barrels per day of oil and 300 Mcf per day of natural gas since the first day of production in April .

Caroline 06-05-033-06 W5M (GWE 40% Working Interest - after completion) was previously drilled and completed and produced as a lower Viking gas well. A second upper Viking interval was recently completed and fracture-stimulated. The zone achieved a stabilized rate of approximately 5 MMcf per day of raw gas at a flowing tubing pressure of 780 psig. The well is expected to come onstream within the next month at 3.5 MMcf per day.

PWEI Caroline 03-36-033-07 W5M (GWE 20% Working Interest - after completion) was recently successfully drilled and cased for the two targeted Cardium gas zones. Similar Cardium wells have had initial production rates in the range of 1.5 MMcf per day of raw gas, plus liquids.

The Company is currently drilling two wells; Valhalla 10-12-076-10 W6M (GWE 75% Working Interest) was spudded on July 13th targeting multi-zone natural gas and at Pouce 14-27-077-11 W6M (GWE 100% Working Interest), the Company started drilling on July 15, 2005 . Results from these wells are expected to be announced in mid to late August.

Grey Wolf's has seven licensed wells in its drilling queue and additional wells are proceeding to the licensing phase. Two rigs have been secured to ensure the Company is able to complete its increased 2005 drilling program.

"Grey Wolf continues to produce strong results, despite the setbacks due to weather experienced during most of the second quarter. The last half of 2005 will be an extremely active and exciting time for Grey Wolf as we complete the majority of the capital program" stated Bob Watson, Chairman and Chief Executive Officer. "We believe that this record setting pace will continue and that Grey Wolf will deliver excellent value to its shareholders."

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.

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