Grey Wolf Exploration Inc.
TSX : GWE

Grey Wolf Exploration Inc.

January 26, 2006 08:30 ET

Grey Wolf Exploration Inc. Achieves Strong Production Growth in 2005

CALGARY, ALBERTA--(CCNMatthews - Jan. 26, 2006) -

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UNITED STATES

Grey Wolf Exploration Inc. (TSX:GWE) ("Grey Wolf") is pleased to announce that for the year ended December 31, 2005, oil and natural gas production rose 33 percent to average 2,183 boe/d compared to 1,636 boe/d in 2004 . During the forth quarter of 2005, production rose 29 percent to average 2,405 boe/d, compared to the same period in 2004. For the month of December 2005, daily production reached 3,225 boe/d and averaged 2,885 boe/d.

The increase in production volumes directly reflects the success of Grey Wolf's 2005 drilling program, where a total of 24 gross (16.6 net) wells were drilled, resulting in 6 gross (4.6 net) oil wells, 17 gross (11.6 net) gas wells and one gross (0.4 net) dry and abandoned well for an overall net success rate of 98 percent.

Fourth quarter 2005 activities included the drilling of 9 gross (5.4 net) wells, resulting in a 93 percent net success rate.

During the fourth quarter, Grey Wolf's most active area was in the Pouce Coupe region of the Peace River Arch, where a total of 4 gross (2.3 net) wells were drilled with a 100 percent success rate. Two wells have been completed and are awaiting tie-in, while the remaining two are scheduled for completion in 2006.

Of the three wells drilled in the Caroline area, two gross (0.64 net) gas wells have been completed and are awaiting tie-in and one gross (0.4 net) well was not commercial following completion.

In the Knopcik area, we drilled two successful 100 percent oil wells. These wells are currently awaiting tie-in.

"During 2005, the Company provided consistent and steady growth to its shareholders." stated Vince Tkachyk, President and Chief Operating Officer of Grey Wolf. "We recognized early in the third quarter that a shortage of services would likely result due to the delays brought on by the wet weather during the second and third quarters. Grey Wolf planned for disruptions by securing service industry contracts whenever possible. We are currently running three rigs and will continue with a minimum of two rigs until spring break up. Construction crews have all been contracted to ensure successful wells are quickly placed on production during 2006."

Grey Wolf's 2006 capital program of $55 million includes the drilling of 33 gross (21.7 net) wells within its core areas. Prior to spring break up, we intend to drill 12 gross (8.1 net) wells, with an additional 7 gross (5.4 net) pending rig availability. To-date, a total of 4 gross (2.2 net) wells have been, or are currently being drilled.

The Company expects to provide further information on its reserves by the end of February or early March, with complete financial and operational information scheduled for release on March 21, 2006.

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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