GW Grey Wolf,

Grey Wolf, Inc. (�Grey Wolf� or the �Company�) (AMEX:GW) reported net income of $32.3 million, or $0.15 per share on a diluted basis, for the three months ended June 30, 2008 compared with net income of $41.7 million, or $0.19 per share on a diluted basis, for the second quarter of 2007. Revenues for the second quarter of 2008 were $216.7 million compared with revenues for the second quarter of 2007 of $227.5 million. For the six months ended June 30, 2008, Grey Wolf reported net income of $63.6 million, or $0.31 per share on a diluted basis, on revenues of $418.2 million compared to net income of $100.3 million, or $0.46 per share on a diluted basis, on revenues of $469.5 million for the six months ended June 30, 2007. �Grey Wolf achieved level quarterly sequential results in the second quarter of 2008 as our industry entered into a period of increased demand for U.S. land drilling rigs,� commented Thomas P. Richards, Chairman, President and Chief Executive Officer. �Our markets are improving significantly as drilling activity intensifies, absorbing an influx of newly built and re-commissioned rigs into the market. In the second quarter, we returned a number of stacked rigs to work, signed additional term contracts, and experienced continuing increases in leading edge dayrates, which now range from $18,000 to $23,500 per day, without fuel and top drives.� The Company reported total earnings before interest expense, income taxes, depreciation and amortization (�EBITDA�) of $80.5 million in the second quarter of 2008, compared to $81.9 million for the previous quarter and $91.7 million for the second quarter of 2007. On a per-rig-day basis, EBITDA was $8,451 for the second quarter of 2008, $8,958 for the first quarter of 2008 and $9,680 for the second quarter of 2007. Turnkey EBITDA per rig day in the second quarter of 2008 was $16,598 and daywork EBITDA per rig day totaled $7,840. The Company�s turnkey results rose quarter-over-quarter, contributing $11.0 million, or 14%, of total EBITDA for the second quarter of 2008. �The outlook for the second half of the year is very good,� noted Mr. Richards. �With commodity prices at high levels and the outlook for oil and natural gas pricing remaining positive, customer interest in new long-term contracts and renewals continues to strengthen. For the third quarter of 2008 to date, Grey Wolf is averaging 109 rigs working and we expect that number to increase as we move into the last half of the year.� �Grey Wolf is expanding and upgrading its fleet as higher energy prices encourage our customers to pursue natural gas prospects in new resource plays. Rig 109, our new built-for-purpose Production and Drilling System Rig (PaDSRigTM), which can drill multiple wells on a single site, rigged up last week in Colorado under a three-year term contract. Rig 110, our second in this series, is expected to be delivered during the fourth quarter. We have also signed two-year term contracts with a customer to move two rigs to the Bakken Shale play in North Dakota. These two mechanical rigs will be enhanced and upgraded to SCR capability before their deployment near the end of the year. This will increase our Bakken exposure to four rigs,� concluded Mr. Richards. Grey Wolf currently markets 122 drilling rigs with 114 rigs under contract today. Of the 114 rigs contracted, 66 are working under daywork term contracts, 40 are working under spot market daywork contracts and 8 are working under turnkey contracts. Grey Wolf averaged 105 rigs working in the second quarter of 2008. This compares with an average of 100 rigs working in the first quarter of 2008 and 104 rigs working during the second quarter of 2007. Under daywork term contracts, the Company has approximately 12,200 days, or an average of 66 rigs, contracted for the remaining two quarters of 2008 and approximately 13,700 days, or an average of 38 rigs, committed in 2009. Capital expenditures totaled $50.0 million in the second quarter of 2008 and for the full year 2008 are projected to be $160.0 million to $170.0 million depending on the level of rig activity and includes the upgrades discussed above. During the third quarter of 2008, the Company expects to average 108 to 111 rigs working with seven to nine of these rigs performing turnkey services. In addition, average daywork EBITDA per rig day is expected to increase by $400 to $600 as the Company�s markets continue to improve. Depreciation expense of approximately $27.5 million, interest expense of approximately $2.7 million and an effective tax rate of approximately 37% are expected for the third quarter of 2008. As previously reported, the Company also will take a pre-tax charge to earnings of approximately $17.0 million (or approximately $0.05 per diluted share) during the third quarter as a result of the shareholder vote and related termination on July 15, 2008 of a proposed merger with Basic Energy Services, Inc. Grey Wolf has scheduled a conference call August 1, 2008 at 9:00 a.m. CT to discuss second quarter 2008 results. The call will be web cast live on the Internet through the Investor Relations page on the Company�s website at: http://www.gwdrilling.com To participate by telephone, call (800) 728-2167 domestically or (415) 537-1938 internationally ten to fifteen minutes prior to the starting time. The reservation number is 21388852. A replay of the conference call will be available by telephone from 11:00 a.m. CT on August 1, 2008 until 11:00 a.m. CT on August 3, 2008. The telephone number for the replay of the call is (800) 633-8284 domestically or (402) 977-9140 internationally and the access code is 21388852. The call will be available for replay through the Grey Wolf website for approximately two weeks. Grey Wolf, Inc., headquartered in Houston, Texas, is a leading provider of turnkey and contract oil and gas land drilling services in the best natural gas producing regions in the United States with a fleet of 122 drilling rigs, which will increase to 123 with the addition of a new rig in 2008. This press release contains forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. The specific forward-looking statements cover our expectations and projections regarding: demand for the Company�s services, deployment of rigs, rig supply in the market, the benefits of term contracts, 2008 rig activity, average daywork EBITDA per day, dayrates, projected depreciation, projected tax rate and interest expense, expected new rig cost and delivery schedule, 2008 financial results and projected capital expenditures in 2008. These forward-looking statements are subject to risks and uncertainties, many of which are beyond our control, that could cause actual results to differ materially, including oil and natural gas prices and trends in those prices, the pricing and other competitive policies of our competitors, uninsured or under-insured casualty losses, cost of insurance coverage, increasing rig supply, changes in interest rates, unexpected costs under turnkey drilling contracts, weather conditions, and the overall level of drilling activity in our market areas. Please refer to reports filed with the Securities and Exchange Commission by Grey Wolf for additional information concerning risk factors that could cause actual results to differ materially from these forward-looking statements. Three Months Ended � � Six Months Ended June 30, June 30, 2008 � 2007 2008 � 2007 (In thousands, except per share amounts) (Unaudited) Revenues $ 216,707 $ 227,520 $ 418,229 $ 469,533 Costs and expenses: Drilling operations 129,953 132,307 243,461 253,260 Depreciation and amortization 26,994 22,397 54,753 43,811 General and administrative 8,221 7,159 16,833 14,558 (Gain) loss on the sale of assets � 12 � � (76 ) � 50 � � (129 ) Total costs and expenses � 165,180 � � 161,787 � � 315,097 � � 311,500 � Operating income (loss) 51,527 65,733 103,132 158,033 Other income (expense): Interest income 1,991 3,593 4,478 6,752 Interest expense � (2,709 ) � (3,438 ) � (6,046 ) � (6,930 ) Other income (expense), net � (718 ) � 155 � � (1,568 ) � (178 ) Net income (loss) before income taxes 50,809 65,888 101,564 157,855 Income taxes expense (benefit): Current 14,001 17,307 27,129 44,287 Deferred � 4,510 � � 6,873 � � 10,814 � � 13,282 � Total income tax expense (benefit) � 18,511 � � 24,180 � � 37,943 � � 57,569 � Net income applicable to common shares $ 32,298 � $ 41,708 � $ 63,621 � $ 100,286 � Net income per common share: (1) Basic $ 0.18 � $ 0.23 � $ 0.36 � $ 0.55 � Diluted $ 0.15 � $ 0.19 � $ 0.31 � $ 0.46 � Weighted average common shares outstanding: Basic � 176,001 � � 183,009 � � 175,886 � � 183,016 � Diluted � 220,042 � � 226,734 � � 219,687 � � 226,655 � � Three Months Ended June 30, 2008 2007 Marketed Rigs at June 30 � 122 � � 120 � Average Rigs Working: Ark-La-Tex 24 25 Gulf Coast 23 24 South Texas 28 27 Rocky Mountain 12 13 Mexico 2 - Mid Continent � 16 � � 15 � Total Average Rigs Working (2) � 105 � � 104 � � (1) Please see �Computation of Earnings Per Share� included in this release. � (2) For the week ending July 24, 2008, the Company averaged 111 rigs working. Operating data comparison for the three months ended June 30, 2008 and 2007. � � � Three Months Ended June 30, 2008 Three Months Ended June 30, 2007 Daywork Operations � Turnkey Operations � Total Daywork Operations � Turnkey Operations � Total (Dollars in thousands except averages per rig day worked) (Unaudited) � Rig days worked 8,862 665 9,527 8,715 761 9,476 � Contract drilling revenues $ 175,637 $ 41,070 $ 216,707 $ 186,225 $ 41,295 $ 227,520 Drilling operating expenses (100,280 ) (29,673 ) (129,953 ) (100,762 ) (31,545 ) (132,307 ) General and administrative expenses (7,731 ) (490 ) (8,221 ) (6,659 ) (500 ) (7,159 ) Interest income 1,860 131 1,991 3,303 290 3,593 Gain (loss) on sale of assets � (12 ) � - � � (12 ) � 72 � � 4 � � 76 � EBITDA $ 69,474 � $ 11,038 � $ 80,512 � $ 82,179 � $ 9,544 � $ 91,723 � � Average per rig day worked: Contract drilling revenue $ 19,819 $ 61,759 $ 22,747 $ 21,368 $ 54,264 $ 24,010 EBITDA 7,840 16,598 8,451 9,430 12,541 9,680 Operating data comparison for the six months ended June 30, 2008 and 2007. � � Six Months Ended June 30, 2008 Six Months Ended June 30, 2007 Daywork Operations � Turnkey Operations � Total Daywork Operations � Turnkey Operations � Total (Dollars in thousands except averages per rig day worked) (Unaudited) � Rig days worked 17,395 1,269 18,664 18,017 1,380 19,397 � Current drilling revenues $ 347,981 $ 70,248 $ 418,229 $ 393,589 $ 75,944 $ 469,533 Drilling operating expenses (193,180 ) (50,281 ) (243,461 ) (200,625 ) (52,635 ) (253,260 ) General and administrative expenses (15,850 ) (983 ) (16,833 ) (13,617 ) (941 ) (14,558 ) Interest income 4,182 296 4,478 6,264 488 6,752 Gain (loss) on sale of assets � (48 ) � (2 ) � (50 ) � 110 � � 19 � � 129 � EBITDA $ 143,085 � $ 19,278 � $ 162,363 � $ 185,721 � $ 22,875 � $ 208,596 � � Average per rig day worked: Contract drilling revenue $ 20,005 $ 55,357 $ 22,408 $ 21,845 $ 55,032 $ 24,206 EBITDA 8,226 15,191 8,699 10,308 16,576 10,754 Reconciliation of Earnings before interest expense, income taxes, depreciation and amortization (EBITDA) to net income (loss) applicable to common shares (In thousands) (Unaudited) � � Three Months Ended Six Months Ended June 30,2008 � March 31,2008 � June 30,2007 June 30,2008 � June 30,2007 � Earnings before interest expense, income taxes, Depreciation and amortization $ 80,512 $ 81,851 $ 91,723 $ 162,363 $ 208,596 Depreciation and Amortization (26,994 ) (27,759 ) (22,397 ) (54,753 ) (43,811 ) Interest expense (2,709 ) (3,337 ) (3,438 ) (6,046 ) (6,930 ) Total income tax (expense)/ benefit � (18,511 ) � (19,432 ) � (24,180 ) � (37,943 ) � (57,569 ) Net income (loss) applicable to common shares $ 32,298 � $ 31,323 � $ 41,708 � $ 63,621 � $ 100,286 � � � June 30, � December 31, 2008 2007 (Unaudited) (In thousands) Condensed Balance Sheet Data: � Cash and cash equivalents $ 313,061 $ 247,701 Restricted cash 867 847 Other current assets � 178,096 � 194,948 Total current assets 492,024 443,496 Net property and equipment 781,952 737,944 Other assets � 30,975 � 26,530 Total assets $ 1,304,951 $ 1,207,970 � � Current liabilities $ 122,481 $ 104,692 Contingent convertible senior notes 275,000 275,000 Other long term liabilities 19,605 18,126 Deferred income taxes 162,349 150,643 Shareholders� equity � 725,516 � 659,509 Total liabilities and equity $ 1,304,951 $ 1,207,970 � Computation of Earnings Per Share (In thousands, except per share amounts) (Unaudited) � A reconciliation of the numerators and denominators of the basic and diluted earnings per share computation is as follows: � � Three Months Ended Six Months Ended June 30, June 30, 2008 � 2007 2008 � 2007 Numerator: Net income $ 32,298 $ 41,708 $ 63,621 $ 100,286 � Add interest expense on contingent convertible senior notes, net of related tax effects (1) � 1,558 � 2,059 � 3,451 � 4,135 Adjusted net income � diluted $ 33,856 $ 43,767 $ 67,072 $ 104,421 � Denominator: Weighted average number of shares outstanding � basic 176,001 183,009 175,886 183,016 � Effect of dilutive securities: Options � treasury stock method 716 740 596 715 Restricted stock 868 528 748 467 Contingent convertible senior notes (1) � 42,457 � 42,457 � 42,457 � 42,457 Weighted average common shares outstanding � diluted � 220,042 � 226,734 � 219,687 � 226,655 � Earnings Per Share: Basic $ 0.18 $ 0.23 $ 0.36 $ 0.55 Diluted $ 0.15 $ 0.19 $ 0.31 $ 0.46 � (1) Please see our latest quarterly report on Form 10-Q for a description of our contingent convertible notes.