Grey Wolf Closes Deal to Acquire Incremental Interests in Caroline Area.

Business Editors

CALGARY, Alberta--(BUSINESS WIRE)

Grey Wolf (TSE:GWX.)

Grey Wolf Exploration Inc. announced today that it has closed its previously publicized agreement to acquire longer-life natural gas producing properties, undeveloped land and an increased interest in gas processing facilities in the Company's focus area of Caroline, Alberta.

The Company swapped its shallow natural gas interests in the Redwater, Radway, Thorhild, Newbrook and Abee areas in exchange for increased interests in the Caroline area assets. As pan of the consideration for completing the property exchange, Grey Wolf received a net cash payment of $1.7 million at closing.

Grey Wolf s direct interest in laud and production at Caroline has increased to average approximately 44%, and its interest in the area gas processing plant has increased to 64%. As a result of this transaction and together with its managed affiliate, Canadian Abraxas Petroleum, Grey Wolf now controls 100% of its Caroline natural gas producing properties, undeveloped lands and gas processing facilities. Current working interest production from the Caroline area has increased from one million cubic feet equivalent per day (Mmcfe/d) to approximately six Mmcfe/d of natural gas and associated natural gas liquids.

Grey Wolf is a Canadian junior oil and natural gas exploration and production company, which trades on The Toronto Stock Exchange under the ticker symbol "GWX". For further information, please contact Jim Wilson, Senior Vice President & CFO at [phone] or fax [phone].

No stock exchange or securities commission has either approved or disapproved the information contained herein.