Grey Wolf Exploration Inc.
TSX : GWE

Grey Wolf Exploration Inc.

October 24, 2005 17:07 ET

Grey Wolf Exploration Inc. Continues Record Setting Pace in Third Quarter

CALGARY, ALBERTA--(CCNMatthews - Oct. 24, 2005) -

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

October 24, 2005 - Grey Wolf Exploration Inc. (TSX:GWE) ("Grey Wolf") announced today record production levels for the third quarter of 2005, averaging 2,181 barrels of oil equivalent ("boe") per day, a 44 percent increase over the 1,511 boe per day recorded during the third quarter of 2004. Daily production volumes by area (on a boe basis) are detailed below:



Third Quarter
2005 Sales Volume

Caroline 739
Knopcik 495
Widewater 472
Ladyfern 137
Pouce Coupe 143
Other (includes overriding royalty properties) 195
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2,181
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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 increase in production levels, combined with strong commodity prices during the third quarter, generated cash flow estimated to be $7.7 million, a 114 percent increase over the $3.6 million posted for the same period in 2004. Net earnings soared 158 percent to approximately $3.1 million during the third quarter of 2005, compared to $1.2 million for the comparable period in 2004. Capital expenditures for the third quarter of 2005 of approximately $14.3 million were 321 percent higher than the $3.4 million invested in the same period of 2004. During the quarter, Grey Wolf drilled 12 gross (10.4 net) wells, resulting in 11 (10.3 net) gas wells and one (1.0 net) oil well. In addition, 8 gross (5.3 net) wells were recompleted, resulting in 5 gross (2.9 net) gas wells and 1 gross (1.0 net) oil well.

Detailed third quarter and nine months' results are scheduled to be released prior to market open on November 8, 2005.

Nine Months Drilling Update:

The following area reviews provides the current status of all wells drilled and recompleted during the first nine months of 2005:

CAROLINE

In the Caroline area under the Caroline area master farmout agreement, PrimeWest has continued to earn interest by drilling four wells. Of these four successful wells, two wells are producing a total of 584 Mcfe per day and two are currently being tied-in. Caroline 7-5-34-7 W5M (GWE 100% WI) operated by Grey Wolf was successfully drilled and completion is currently in progress with plans to tie in the well into the PetroCanada Bearberry Gas Plant. To date all five wells in the Caroline area have been cased and are in various phases of completion, tie-in or are on production. We anticipate three additional wells to be drilled before year end.

WIDEWATER

Development of the Widewater natural gas prone area has commenced with the drilling of two wells. The primary targets were absent in the first well, 6-2-74-8 W5M (GWE 100% WI), however, casing was set to test both deep and shallow gas reservoirs identified on well logs. The second well 6-10-74-8 W5M (GWE 100% WI) has recently been drilled, cased and is successful in the primary objective, as well as other reservoirs, both shallow and deeper. Completion and tie in of both wells is expected to commence shortly.

KNOPCIK

Grey Wolf has plans to drill four wells for development of crude oil reservoirs in the Knopcik area. To date the re-entry of the 8-16-74-10 W6M (GWE 100% WI) has been conducted and the drilling of the 14-8-74-10 W6M (GWE 100% WI) has been completed.

Grey Wolf 14-8-74-10 W6M (GWE 100% WI) has been drilled, completed and swab tested oil at 85 barrels per day. Plans are in progress to install a pump and construct an oil flowline to produce the well to the Grey Wolf battery.

The two remaining wells in the Knopcik program are scheduled to be drilled prior to year end.

VALHALLA

Our 2005 Valhalla program consists of four wells,of which three have been drilled and cased with one remaining to be drilled before year end. The Grey Wolf 2-3-77-8 W6M (GWE 100% WI) was drilled and while the primary target was present, it was water bearing. However, two other formations look prospective for natural gas. Completion and testing of these zones is planned for the fourth quarter.

The Valhalla 14-32-76-9 W6M (GWE 100% WI) was drilled to evaluate multiple zones. The well has been cased and production tested in excess of 100 barrels of oil per day. Plans are underway to build a single well oil battery and gas pipeline to bring this well on production during the fourth quarter. At least one offset is planned in the near future.

The third well that was drilled on the Valhalla property was 10-12-76-10 W6M (GWE 75% WI). Casing has been set and the well has tested oil and gas in excess of 250 barrels per day and 1.7 MMcf per day. Plans are currently in progress to build a single well oil battery and a gas pipeline to bring this well on production during the fourth quarter. A development well is planned for the near future.

POUCE COUPE

Pouce Coupe, the third of Grey Wolf's multi-zone core areas in the Peace River Arch, is targeted in our budget for four wells to be drilled and four recompletions to be undertaken. To date three successful multi-zone wells have been drilled and all four recompletions have been finished, with three successes. One well remains to be drilled before year end.

During March 2005, the Pouce Coupe 12-32-77-10 W6M (GWE 12.5% WI) was drilled and cased and tested at 900 Mcf per day. The well was tied into the pipeline and is currently producing at 200 Mcf per day of natural gas. The recompletion of 12-32 in July 2005 resulted in an initial test of 230 barrels of oil per day with 300 Mcf per day of associated solution gas. This well is currently producing 175 barrels per day of oil and 350 Mcf per day of solution gas plus liquids.

The Pouce Coupe 6-17-77-10 W6M (GWE 100% WI) was recompleted and currently is on production at 1.2 MMcf per day with associated liquids.

Pouce Coupe 14-27-77-11 W6M (GWE 100% WI) was drilled and cased as a successful multi-zone well. A zone was completed and tested at 300 Mcf per day. This zone has been suspended and the wellbore recompleted to an upper zone which tested in excess of 5 MMcf per day and plans are to have the well on production during the fourth quarter.

Recently the Pouce Coupe 14-20-77-10 W6M (GWE 100% WI) was drilled and cased for multi-zone potential. Completion and testing of the well is underway.

It should be noted that production test data refers to preliminary tests only. Sustainable production information will be reported as it becomes available.

"We achieved outstanding success through the drill bit during the third quarter of 2005" stated Vincent J. Tkachyk, President and Chief Operating Officer of the Company. Looking forward to the fourth quarter of 2005, Mr. Tkachyk said, "all factors are in place for Grey Wolf to achieve continued record results as our year-to-date drilling successes are brought onstream and we receive the full benefit of the strong commodity price environment."

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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