Grey Wolf Exploration Inc.

Grey Wolf Exploration Inc.

February 28, 2005 09:13 ET

Grey Wolf Exploration Inc. Announces Closing of Initial Public Offering and Commences Trading on the Toronto Stock Exchange


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: GREY WOLF EXPLORATION INC.

TSX SYMBOL: GWE

FEBRUARY 28, 2005 - 09:13 ET

Grey Wolf Exploration Inc. Announces Closing of
Initial Public Offering and Commences Trading on the
Toronto Stock Exchange

CALGARY, ALBERTA--(CCNMatthews - Feb. 28, 2005) - Grey Wolf Exploration
Inc. (TSX:GWE) ("Grey Wolf") is pleased to announce today, the closing
of its initial public offering (the "Offering"). At closing, a total of
17,800,000 common shares were issued at a price of $2.80 per common
share for gross proceeds of $49,840,000. In addition, Abraxas Petroleum
Corporation, Grey Wolf's sole shareholder ("Abraxas"), sold an aggregate
of 9,100,000 common shares of Grey Wolf, offered on a secondary basis
(the "Secondary Offering") at a price of $2.80 per common share for
gross proceeds of $25,480,000. As a result of these offerings, a total
of 26,900,000 common shares were issued or sold.

The net proceeds from the Offering have been partially used by Grey Wolf
to repay inter-company debt owing to Abraxas and to repay the
outstanding balance of a term loan. The remaining net proceeds of the
Offering will be used to eliminate Grey Wolf's working capital
deficiency. Common shares of Grey Wolf will begin trading on the Toronto
Stock Exchange today under the symbol "GWE".

Abraxas has granted the underwriters the option (the "Over-Allotment
Option") to purchase up to an additional 3,902,360 common shares at
$2.80 per common share for a period of 30 days from closing. In the
event that the Over-Allotment Option is exercised in full, the total
gross proceeds of the Secondary Offering will be $36,406,608. Grey Wolf
will not receive any of the proceeds from the exercise of the
Over-Allotment Option.

At closing, Abraxas holds an approximate 12.7 percent ownership interest
in Grey Wolf. Should the underwriters elect to exercise the
Over-Allotment Option in full, Abraxas will have no further ownership
interest in Grey Wolf.

The offering was led by CIBC World Markets Inc. on behalf of a syndicate
of underwriters that included BMO Nesbitt Burns Inc., GMP Securities
Ltd., and Canaccord Capital Corporation.

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. As of September 30, 2004, Grey Wolf
had proved plus probable reserves of approximately 5.55 million barrels
of oil equivalent. Grey Wolf has current working interest production of
more than 2,000 barrels of oil equivalent per day, approximately 75
percent of which is comprised of natural gas.

The securities offered have not been registered under the U.S.
Securities Act of 1933, as amended, and may not be offered or sold in
the United States absent registration or an applicable exemption from
the registration requirements. A prospectus related to these securities
has been filed with securities commissions or similar authorities in
each of the provinces and territories of Canada. This news release shall
not constitute an offer to buy these securities in any state of the
United States or province or territory of Canada.

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES

-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Grey Wolf Exploration Inc.
    Dawne L. Stirling
    Manager, Investor Relations
    (403) 218-1473
    Email: dstirling@greywolf.ca