Grey Wolf Exploration Inc.

Grey Wolf Exploration Inc.

September 20, 2005 15:03 ET

Grey Wolf Increases 2005 Capital Expenditure Program to $32 Million

CALGARY, ALBERTA--(CCNMatthews - Sept. 20, 2005) - The Board of Directors of Grey Wolf Exploration Inc. (TSX:GWE) ("Grey Wolf") is pleased to announce that as a result of the Company's recent drilling success, it has authorized a second increase in 2005 capital spending to a total of $32 million from the previously approved $25.0 million. The 2005 capital program will continue to be funded internally. This 28 percent increase enables Grey Wolf to immediately follow up on its successful drilling locations.

The revised program consists of drilling 23 gross (16.9 net) wells and the recompletion of 8 gross (4.7 net) wells, of which 11 gross (7.3 net) wells have been drilled and cased and 6 gross (3.3 net) wells have been recompleted to August 31, 2005 and are in various stages of testing or tie-in. Remaining in the program for 2005 are 12 gross (9.7 net) wells to be drilled and 2 (1.4 net) recompletions. Grey Wolf has contracted two drilling rigs for the winter drilling season to ensure that the balance of the 2005 program can be completed.

"The corporate results posted to-date are testimony to the quality of our asset base and the strength and expertise of the team we have assembled", stated Robert L. G. Watson, Chairman and Chief Executive Officer of the Company. "The rise in capital spending, continued strength in commodity prices and our success with the drill bit, should continue to create outstanding growth for our shareholders."

As a result of the increased capital program, Grey Wolf has raised its production targets as follows:

- Forecast 2005 average daily production to in excess of 2,200 boe/d (from previous guidance of 2,150 boe/d)

- Forecast 2005 exit rate to in excess of 3,000 boe/d (from previous guidance of 2,500 boe/d)

Selected 2005 Forecast Data:

- Average daily production volume In excess of 2,200 boe/d
- Production exit rate In excess of 3,000 boe/d
- Average corporate royalty rate 21 percent
- Lease operating expenses of approximately $4.90 per boe
- General and administrative expenses of
approximately $3.00 per boe
- Depletion, depreciation and amortization
of approximately $13.25 per boe
- 2005 weighted average shares - basic (000's) 27,974
- Grey Wolf price differential off Edmonton Posting: crude - $0.80 per
bbl and natural gas - AECO less $0.30 per MMBTU (average heating
value 1,039 BTU per scf)

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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