Grey Wolf Exploration Inc.
TSX : GWE

Grey Wolf Exploration Inc.

August 09, 2007 18:20 ET

Grey Wolf Announces Summary Second Quarter 2007 Results

CALGARY, ALBERTA--(Marketwire - Aug. 9, 2007) -

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Grey Wolf Exploration Inc. ("Grey Wolf") (TSX:GWE) today reported summary financial and operating results for the quarter and six months ended June 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.

Mr. Robert Watson, Chairman and Chief Executive Officer of the Company stated that "Our second quarter demonstrated volume increases over the first quarter due to our work with the startup of the Pouce Coupe pipeline. This experience and the current business environment validate the wisdom of our dual business strategy of combining exploitation of our existing Pouce Coupe and Valhalla areas with a high impact exploration program elsewhere in the Alberta Basin".

The second quarter of 2007 resulted in:

- Average production of 2,283 boe per day

- Revenue of $10.2 million

- EBITDA of $5.6 million

- Funds flow from operations of $5 million ($0.15 per share diluted)(a)

- Net income of $0.3 million ($0.01 per share diluted)

The six months ended June 30, 2007 resulted in:

- Average production of 1,928 boe per day

- Revenue of $17.2 million

- EBITDA of $8.9 million

- Funds flow from operations of $8 million ($0.25 per share diluted)(a)

- Net income of $0.3 million ($0.01 per share diluted)

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.

Net income in the second quarter of 2007 was $0.3 million, or $0.01 per share compared to net income in the same quarter of 2006 of $0.6 million, or $0.02 per share. Net income for the six months ended June 30, 2007 was $0.3 million, or $0.01 per share compared to net income during the same six month period of 2006 of $3.1 million, or $0.10 per share.

Note (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.

Management utilizes "Funds flow" as a key measure to assess the ability of the Company to finance operating and capital activities. Funds flow from operations has been calculated as follows for purposes of this media release:



Funds Flow From Operations

Three Months Six Months
($000's except per share amounts) Ended June 30, Ended June 30,
2007 2006 2007 2006

Net income $ 303 $ 670 $ 310 $ 3,092
Add:
Depletion, depreciation and accretion 3,981 3,331 6,608 5,989
Future income taxes 498 204 557 1,545
Stock compensation expense 250 230 491 460

Funds flow from operations $ 5,032 $4,435 $7,966 $11,086


Mr. Watson added "Since spring break up, in the Pouce Coupe area we have drilled and completed two wells (100 percent) and are currently drilling a third (100 percent). Grey Wolf is ahead of schedule on its planned development program in the area. We are, however, concerned about the current price of natural gas and the cost of drilling new wells, and will be monitoring the situation very closely to determine if activity in this area should be moderated out of financial prudence. We plan to continue our high impact exploration projects which will expose our company to significant new reserves during the remainder of the 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 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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