##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 31, 2007
 or
 o
    
    Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission File Number 1-8226
 
 Grey Wolf, Inc.
  Texas
    
    74-2144774(State or jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)10370 Richmond Avenue, Suite 600Houston, Texas
    
    77042(Address of principal executive offices)
    
    (Zip Code)
 (713) 435-6100
 þ o
  þ o o
 o þ




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##### 



GREY WOLF, INC. AND SUBSIDIARIES
Table of Contents
 PagePart I.
    

Financial
InformationItem 1.
    

Financial
StatementsConsolidated Balance Sheets
    
    
    3Consolidated Statements of Operations
    
    
    4Consolidated Statements of Shareholders Equity
and Comprehensive Income
    
    
    5Consolidated Statements of Cash Flows
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    15Item 3.
    
    Quantitative and Qualitative Disclosure about Market Risk
    
    
    26Item 4.
    
    Controls and Procedures
    
    
    26Part II.
    
    Other InformationItem 1.
    
    Legal Proceedings
    
    
    27Item 1a.
    
    Risk Factors
    
    
    27Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    27Item 3.
    
    Defaults Upon Senior Securities
    
    
    27Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    27Item 5.
    
    Other Information
    
    
    28Item 6.
    
    Exhibits
    
    
    29Signatures
    
    
    30Certification of CEO Pursuant to Rule 13a-14(a)Certification of CFO Pursuant to Rule 13a-14(a)Certifications Pursuant to Section 1350
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##### Table of Contents



GREY WOLF, INC. AND SUBSIDIARIES
 
 Consolidated Balance Sheets
  March 31,
    
    
    December 31,2007
    
    
    2006(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    273,699
    
    
    $
    229,773Restricted cash
    
    
    827
    
    
    
    817Accounts receivable, net of allowance of $3,169
    
    
    191,282
    
    
    
    206,523Prepaids and other current assets
    
    
    5,991
    
    
    
    7,817Deferred tax assets
    
    
    4,637
    
    
    
    6,916Total current assets
    
    
    476,436
    
    
    
    451,846Property and equipment:Land, buildings and improvements
    
    
    7,061
    
    
    
    7,044Drilling equipment
    
    
    1,173,116
    
    
    
    1,107,457Furniture and fixtures
    
    
    4,891
    
    
    
    4,839Total property and equipment
    
    
    1,185,068
    
    
    
    1,119,340Less: accumulated depreciation
    
    
    (531,986
    )
    
    
    (511,204
    )Net property and equipment
    
    
    653,082
    
    
    
    608,136Goodwill
    
    
    10,377
    
    
    
    10,377Other noncurrent assets, net
    
    
    10,941
    
    
    
    16,625$
    1,150,836
    
    
    $
    1,086,984LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable-trade
    
    $
    75,258
    
    
    $
    85,253Accrued workers compensation
    
    
    6,273
    
    
    
    7,435Payroll and related employee costs
    
    
    9,037
    
    
    
    15,952Accrued interest payable
    
    
    3,939
    
    
    
    2,536Current income taxes payable
    
    
    32,210
    
    
    
    20,641Other accrued liabilities
    
    
    15,127
    
    
    
    15,265Total current liabilities
    
    
    141,844
    
    
    
    147,082Contingent convertible senior notes
    
    
    275,000
    
    
    
    275,000Other long-term liabilities
    
    
    13,188
    
    
    
    9,877Deferred income taxes
    
    
    136,972
    
    
    
    121,231Commitments and contingent liabilities
    
    
    
    
    
    
    Shareholders equity:Series B Junior Participating Preferred stock; $1 par value;
250,000 shares authorized; none outstanding
    
    
    
    
    
    
    Common stock; $0.10 par value;
shares authorized: 300,000,000; shares issued: 195,893,284
at March 31, 2007 and 195,228,691 at December 31, 2006;
shares outstanding:184,859,712 at March 31, 2007
and 185,936,440 at December 31, 2006
    
    
    19,589
    
    
    
    19,523Additional paid-in capital
    
    
    385,115
    
    
    
    383,482Treasury stock, at cost: 11,033,572 shares at
March 31, 2007 and 9,292,251 shares at December 31, 2006
    
    
    (76,565
    )
    
    
    (65,119
    )Retained earnings
    
    
    255,693
    
    
    
    195,908Total shareholders equity
    
    
    583,832
    
    
    
    533,794$
    1,150,836
    
    
    $
    1,086,984
 See accompanying notes to consolidated financial statements
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##### Table of Contents



GREY WOLF, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Operations
   Three Months EndedMarch 31,2007
    
    
    2006Contract drilling revenue
    
    $
    242,013
    
    
    $
    222,879Costs and expenses:Drilling operations
    
    
    120,953
    
    
    
    122,860Depreciation and amortization
    
    
    21,414
    
    
    
    17,148General and administrative
    
    
    7,399
    
    
    
    5,317Gain on sale of assets
    
    
    (53
    )
    
    
    (9,515
    )Total costs and expenses
    
    
    149,713
    
    
    
    135,810Operating income
    
    
    92,300
    
    
    
    87,069Other income (expense):Interest income
    
    
    3,159
    
    
    
    2,116Interest expense
    
    
    (3,492
    )
    
    
    (3,269
    )Other expense, net
    
    
    (333
    )
    
    
    (1,153
    )Income before income taxes
    
    
    91,967
    
    
    
    85,916Income tax expense:Current
    
    
    26,980
    
    
    
    28,900Deferred
    
    
    6,409
    
    
    
    2,767Total income tax expense
    
    
    33,389
    
    
    
    31,667Net income
    
    $
    58,578
    
    
    $
    54,249Net income per common share (Note 2):Basic
    
    $
    0.32
    
    
    $
    0.28Diluted
    
    $
    0.27
    
    
    $
    0.24Weighted average common shares outstanding:Basic
    
    
    183,023
    
    
    
    192,541Diluted
    
    
    226,577
    
    
    
    236,001
 See accompanying notes to consolidated financial statements
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GREY WOLF, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Shareholders Equity and Comprehensive Income
  Common Stock
    
    
    Additional
    
    
    Treasury Stock
    
    
    RetainedNumber of
    
    
    Amount,
    
    
    Paid-in
    
    
    Number of
    
    
    Amount,
    
    
    EarningsShares
    
    
    at $0.10 par value
    
    
    Capital
    
    
    Shares
    
    
    at cost
    
    
    (Deficit)
    
    
    TotalBalance, December 31, 2005
    
    
    192,626
    
    
    $
    19,263
    
    
    $
    374,012
    
    
    
    
    
    
    $
    
    
    
    $
    (24,043
    )
    
    $
    369,232Exercise of stock options
    
    
    905
    
    
    
    90
    
    
    
    3,062
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,152Tax benefit of stock
option exercises
    
    
    
    
    
    
    
    
    
    
    1,330
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,330Issuance of restricted stock,
net of forfeitures
    
    
    1,697
    
    
    
    170
    
    
    
    (170
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation
expense
    
    
    
    
    
    
    
    
    
    
    5,248
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,248Purchase of treasury stock
    
    
    (9,292
    )
    
    
    
    
    
    
    
    
    
    
    9,292
    
    
    
    (65,119
    )
    
    
    
    
    
    
    (65,119
    )Comprehensive net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    219,951
    
    
    
    219,951Balance, December 31, 2006
    
    
    185,936
    
    
    
    19,523
    
    
    
    383,482
    
    
    
    9,292
    
    
    
    (65,119
    )
    
    
    195,908
    
    
    
    533,794Adjustment for the adoption
of FASB Interpretation
No. (FIN) 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,207
    
    
    
    1,207Exercise of stock options
    
    
    52
    
    
    
    5
    
    
    
    171
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    176Tax effect
of share-based payments
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9
    )Issuance of restricted stock,
net of forfeitures
    
    
    613
    
    
    
    61
    
    
    
    (61
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation
expense
    
    
    
    
    
    
    
    
    
    
    1,532
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,532Purchase of treasury stock
    
    
    (1,741
    )
    
    
    
    
    
    
    
    
    
    
    1,741
    
    
    
    (11,446
    )
    
    
    
    
    
    
    (11,446
    )Comprehensive net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,578
    
    
    
    58,578Balance, March 31, 2007 (Unaudited)
    
    
    184,860
    
    
    $
    19,589
    
    
    $
    385,115
    
    
    
    11,033
    
    
    $
    (76,565
    )
    
    $
    255,693
    
    
    $
    583,832
 See accompanying notes to consolidated financial statements
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GREY WOLF, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Cash Flows
   Three Months EndedMarch 31,2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    58,578
    
    
    $
    54,249Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    21,414
    
    
    
    17,148Deferred income taxes
    
    
    6,409
    
    
    
    2,767Gain on sale of assets
    
    
    (53
    )
    
    
    (9,515
    )Stock-based compensation expense
    
    
    1,532
    
    
    
    950Excess tax benefit of stock option exercises
and vested restricted stock
    
    
    (45
    )
    
    
    (225
    )Net effect
of changes in assets and liabilities related to operating accounts
    
    
    33,356
    
    
    
    138Cash provided by operating activities
    
    
    121,191
    
    
    
    65,512Cash flows from investing activities:Property and equipment additions
    
    
    (67,377
    )
    
    
    (27,985
    )Proceeds from sale of property and equipment
    
    
    1,337
    
    
    
    15,641Deposits for new rig purchases
    
    
    
    
    
    
    (12,673
    )Cash used in investing activities
    
    
    (66,040
    )
    
    
    (25,017
    )Cash flows from financing activities:Proceeds from exercise of stock options
    
    
    176
    
    
    
    996Excess tax benefit of stock option exercises
and vested restricted stock
    
    
    45
    
    
    
    225Purchase of treasury stock
    
    
    (11,446
    )
    
    
    Cash (used in) provided by financing activities
    
    
    (11,225
    )
    
    
    1,221Net increase in cash and cash equivalents
    
    
    43,926
    
    
    
    41,716Cash and cash equivalents, beginning of period
    
    
    229,773
    
    
    
    173,145Cash and cash equivalents, end of period
    
    $
    273,699
    
    
    $
    214,861Supplemental cash flow disclosure:Cash paid for interest
    
    $
    1,874
    
    
    $
    2,887Cash paid for taxes
    
    $
    1,320
    
    
    $
    625
 See accompanying notes to consolidated financial statements
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GREY WOLF, INC. AND SUBSIDIARIES
 
 Notes to Consolidated Financial Statements
  (1) General
   (2) Significant Accounting Policies
 Earnings Per Share
   - 7 -




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GREY WOLF, INC. AND SUBSIDIARIES  Notes to Consolidated Financial Statements
  Three Months EndedMarch 31,2007
    
    
    2006(In thousands, except per share amounts)Numerator:Net income
    
    $
    58,578
    
    
    $
    54,249Add interest expense on contingent
convertible senior notes,
net of related tax effects
    
    
    2,074
    
    
    
    1,902Adjusted net incomediluted
    
    $
    60,652
    
    
    $
    56,151Denominator:Weighted average common
shares outstandingbasic
    
    
    183,023
    
    
    
    192,541Effect of dilutive securities:Options  treasury stock method
    
    
    691
    
    
    
    893Restricted stock  treasury stock method
    
    
    406
    
    
    
    110Contingent convertible senior notes
    
    
    42,457
    
    
    
    42,457Weighted average common shares
outstandingdiluted
    
    
    226,577
    
    
    
    236,001Earnings per common share:Basic
    
    $
    0.32
    
    
    $
    0.28Diluted
    
    $
    0.27
    
    
    $
    0.24
  Three Months EndedMarch 31,2007
    
    
    2006Basic earnings per share:Unvested restricted stock
    
    
    2,148,381
    
    
    
    1,736,699Diluted earnings per share:Anti-dilutive stock options
    
    
    1,275,446
    
    
    
    
 - 8 -




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GREY WOLF, INC. AND SUBSIDIARIES  Notes to Consolidated Financial Statements
 Share-Based Payment Arrangements
   Recent Accounting Pronouncements
  - 9 -




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GREY WOLF, INC. AND SUBSIDIARIES  Notes to Consolidated Financial Statements
  (3) Accounting for Income Taxes
   (4) Long-Term Debt
  March 31,
    
    
    December 31,2007
    
    
    20063.75% Contingent ConvertibleSenior Notes due May 2023
    
    $
    150,000
    
    
    $
    150,000Floating Rate Contingent ConvertibleSenior Notes due April 2024
    
    
    125,000
    
    
    
    125,000275,000
    
    
    
    275,000Less current maturities
    
    
    
    
    
    
    Long-term debt
    
    $
    275,000
    
    
    $
    275,000
 3.75% Notes
   - 10 -




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GREY WOLF, INC. AND SUBSIDIARIES  Notes to Consolidated Financial Statements
   Floating Rate Notes
    CIT Facility
   - 11 -




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GREY WOLF, INC. AND SUBSIDIARIES  Notes to Consolidated Financial Statements
   (5) Segment Information
  (6) Contingencies
  (7) Capital Stock and Option Plans
  
    
    incentive stock options;
    
    non-statutory stock options;
    
    restricted shares; and
    
    other stock-based and cash awards.
   - 12 -




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GREY WOLF, INC. AND SUBSIDIARIES  Notes to Consolidated Financial Statements
   (8) Treasury Stock
   (9) Concentrations
   (10) Insurance Recoveries
  - 13 -




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GREY WOLF, INC. AND SUBSIDIARIES  Notes to Consolidated Financial Statements
 (11) Asset Sales
  - 14 -




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GREY WOLF, INC. AND SUBSIDIARIES  Managements Discussion and Analysis of Financial  Condition and Results of Operations
  Overview
    New Rig Purchases and Reactivations
  Rig Activity
  - 15 -




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Domestic
    
2005
    

2006
    

2007Land Rig
    
    Full
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Full
    
    
    
    
    
    4/1 Count
    
    Year
    
    Q-1
    
    Q-2
    
    Q-3
    
    Q-4
    
    Year
    
    Q-1
    
    4/30Baker Hughes
    
    
    1,263
    
    
    
    1,417
    
    
    
    1,512
    
    
    
    1,603
    
    
    
    1,609
    
    
    
    1,535
    
    
    
    1,626
    
    
    
    1,646Grey Wolf
    
    
    102
    
    
    
    109
    
    
    
    108
    
    
    
    107
    
    
    
    110
    
    
    
    108
    
    
    
    110
    
    
    
    103
 Term Contracts
    Drilling and Contract Rates
  - 16 -




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Turnkey Activity
   First Quarter 2007 Results and Financial Outlook
     - 17 -




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Critical Accounting Policies
  Property and Equipment
  Impairment of Long-Lived Assets
   - 18 -




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Goodwill
   Revenue Recognition
  Insurance Accruals
   - 19 -




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Income Taxes
     Financial Condition and Liquidity
  March 31, 2007
    
    
    December 31, 2006(Unaudited)(Dollars in thousands)Amount
    
    
    %
    
    
    Amount
    
    
    %Working capital
    
    $
    334,592
    
    
    
    33
    
    
    $
    304,764
    
    
    
    32Property and equipment, net
    
    
    653,082
    
    
    
    65
    
    
    
    608,136
    
    
    
    65Goodwill
    
    
    10,377
    
    
    
    1
    
    
    
    10,377
    
    
    
    1Other noncurrent assets, net
    
    
    10,941
    
    
    
    1
    
    
    
    16,625
    
    
    
    2Total
    
    $
    1,008,992
    
    
    
    100
    
    
    $
    939,902
    
    
    
    100Long-term debt
    
    $
    275,000
    
    
    
    27
    
    
    $
    275,000
    
    
    
    29Other long-term liabilities
    
    
    150,160
    
    
    
    15
    
    
    
    131,108
    
    
    
    14Shareholders equity
    
    
    583,832
    
    
    
    58
    
    
    
    533,794
    
    
    
    57Total
    
    $
    1,008,992
    
    
    
    100
    
    
    $
    939,902
    
    
    
    100
 -20-




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Significant Changes in Financial Condition
    Long Term Debt
 3.75% Notes
    Floating Rate Notes
  -21-




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CIT Facility
    -22-




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Cash Flow
  Three Months EndedMarch 31,2007
    
    
    2006(In thousands)(Unaudited)Net cash provided by (used in):Operating activities
    
    $
    121,191
    
    
    $
    65,512Investing activities
    
    
    (66,040
    )
    
    
    (25,017
    )Financing activities
    
    
    (11,225
    )
    
    
    1,221Net increase in cash
    
    $
    43,926
    
    
    $
    41,716
    Projected Cash Sources and Uses
   -23-




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Inflation and Changing Prices
  Results of Operations
  Reconciliation of Non-GAAP Financial Measures
  Three Months EndedMarch 31,2007
    
    
    2006(In thousands)(Unaudited)Earnings before interest expense, taxes,
depreciation and amortization
    
    $
    116,873
    
    
    $
    106,333Depreciation and amortization
    
    
    (21,414
    )
    
    
    (17,148
    )Interest expense
    
    
    (3,492
    )
    
    
    (3,269
    )Total income tax expense
    
    
    (33,389
    )
    
    
    (31,667
    )Net income applicable to common shares
    
    $
    58,578
    
    
    $
    54,249
 -24-




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Comparison of the Three Months Ended March 31, 2007 and 2006
  Three Months Ended
    
    
    Three Months EndedMarch 31, 2007
    
    
    March 31, 2006Daywork
    
    
    Turnkey
    
    
    
    
    
    
    Daywork
    
    
    TurnkeyOperations
    
    
    Operations
    
    
    Total
    
    
    Operations
    
    
    Operations
    
    
    Total(Dollars in thousands except averages per rig day worked)(Unaudited)Rig days worked
    
    
    9,302
    
    
    
    619
    
    
    
    9,921
    
    
    
    8,706
    
    
    
    1,080
    
    
    
    9,786Contract drilling revenues
    
    $
    207,364
    
    
    $
    34,649
    
    
    $
    242,013
    
    
    $
    164,367
    
    
    $
    58,512
    
    
    $
    222,879Drilling operations expenses
    
    
    (99,863
    )
    
    
    (21,090
    )
    
    
    (120,953
    )
    
    
    (84,481
    )
    
    
    (38,379
    )
    
    
    (122,860
    )General and administrative
expenses
    
    
    (6,958
    )
    
    
    (441
    )
    
    
    (7,399
    )
    
    
    (4,741
    )
    
    
    (576
    )
    
    
    (5,317
    )Interest income
    
    
    2,961
    
    
    
    198
    
    
    
    3,159
    
    
    
    1,882
    
    
    
    234
    
    
    
    2,116Gain on sale of assets
    
    
    38
    
    
    
    15
    
    
    
    53
    
    
    
    8,468
    
    
    
    1,047
    
    
    
    9,515EBITDA
    
    $
    103,542
    
    
    $
    13,331
    
    
    $
    116,873
    
    
    $
    85,495
    
    
    $
    20,838
    
    
    $
    106,333Average per rig day worked:Contract drilling revenues
    
    $
    22,292
    
    
    $
    55,976
    
    
    $
    24,394
    
    
    $
    18,880
    
    
    $
    54,178
    
    
    $
    22,775EBITDA
    
    $
    11,131
    
    
    $
    21,536
    
    
    $
    11,780
    
    
    $
    9,820
    
    
    $
    19,294
    
    
    $
    10,866
  Daywork Operations
  -25-




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##### Table of Contents



Turnkey Operations
  Other
    
 Item 3. Quantitative and Qualitative Disclosure about Market Risk
 Interest Rate Risk.
 
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  -26-




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##### Table of Contents



Changes in Internal Control over Financial Reporting
  
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1a. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  ApproximateTotal Number
    
    
    Dollar Value ofof Shares
    
    
    Shares that MayPurchased as
    
    
    Yet beTotal Number
    
    
    Average
    
    
    Part of Publicly
    
    
    Purchasedof Shares
    
    
    Price Paid
    
    
    Announced
    
    
    Under thePeriod
    
    Purchased(1)
    
    
    per Share
    
    
    Program
    
    
    Program(2)January 1, 2007 to January 31, 2007
    
    
    1,219
    
    
    $
    6.59
    
    
    
    1,219
    
    
    $
    27,161February 1, 2007 to February 28, 2007
    
    
    97
    
    
    $
    6.62
    
    
    
    
    
    
    $
    27,161March 1, 2007 to March 31, 2007
    
    
    426
    
    
    $
    6.51
    
    
    
    425
    
    
    $
    24,408
 
 (1)
    
    Our employees elected to have shares of stock withheld to cover payroll taxes when
shares of restricted stock vest. We then pay the taxes on their behalf and hold those
shares as treasury stock. We had approximately 98,000 of such treasury share purchases
during the three months ended March 31, 2007. These share repurchases are not covered
under a publicly announced program.(2)
    
    On May 25, 2006, the Company announced that its Board of Directors approved a plan
authorizing the repurchase of up to $100.0 million of Grey Wolf common stock in open
market or in privately negotiated block-trade transactions. The number of shares to be
purchased and the timing of purchases will be based on several factors, including the
price of the common stock, general market conditions, available cash and alternate
investment opportunities. The stock repurchase program is subject to termination prior to
completion. 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
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##### Table of Contents



Item 5. Other Information
  
    
    business strategy;
    
    demand for our services;
    
    spending by our customers;
    
    projected rig activity;
    
    increases in rig supply and its effects on us;
    
    projected dayrates;
    
    projected interest expense;
    
    projected tax rate;
    
    rigs expected to be engaged in turnkey operations;
    
    cost of building new rigs and delivery times of these rigs;
    
    the ability to recover our refurbishment costs or the purchase price of rigs from term contracts;
    
    the availability and financial terms of term contracts;
    
    wage rates and retention of employees;
    
    sufficiency of our capital resources and liquidity;
    
    projected depreciation and capital expenditures;
    
    future common stock repurchases by us; and
    
    projected sources and uses of cash.
  
    
    fluctuations in prices and demand for oil and natural gas;
    
    fluctuations in levels of oil and natural gas exploration and development activities;
    
    fluctuations in demand for contract land drilling services;
    
    fluctuations in interest rates;
    
    the existence and competitive responses of our competitors;
    
    uninsured or underinsured casualty losses;
    
    technological changes and developments in the industry;
    
    the existence of operating risks inherent in the contract land drilling industry;
    
    U.S. and global economic conditions;
    
    the availability and terms of insurance coverage;
    
    the ability to attract and retain qualified personnel;
    
    unforeseen operating costs such as cost for environmental remediation and turnkey cost overruns; and
    
    weather conditions.
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##### Table of Contents



Item 6. Exhibits
 3.1
    
    Articles of Incorporation of Grey Wolf, Inc., as amended (incorporated herein by
reference to Exhibit 3.1 to Form 10-Q dated May 12, 1999).3.2
    
    By-Laws of Grey Wolf, Inc., as amended (incorporated herein by reference to
Exhibit 99.1 to Form 8-K dated March 23, 1999).4.1
    
    Rights Agreement dated as of September 21, 1998 by and between the Company
and American Stock Transfer and Trust Company as Rights Agent (incorporated herein by
reference to Exhibit 4.1 to Form 8-K filed September 22, 1998).4.2
    
    Indenture, dated as of May 7, 2003, relating to the 3.75% Contingent
Convertible Senior Notes due 2023 between the Company, the Guarantors, and JPMorgan
Chase Bank, a New York Banking Corporation, as Trustee (incorporated herein by
reference to Exhibit 4.2 to the Companys Registration Statement on Form S-3 No.
333-106997 filed July 14, 2003).4.3
    
    Supplemental Indenture, dated as of May 22, 2003, relating to the 3.75%
Contingent Convertible Senior Notes due 2023 between the Company, the Guarantors, and
JPMorgan Chase Bank, a New York Banking Corporation, as Trustee (incorporated herein
by reference to Exhibit 4.3 to the Companys Registration Statement on Form S-3 No.
333-106997 filed July 14, 2003).4.4
    
    Indenture, dated as of March 31, 2004, relating to the Floating Rate
Contingent Convertible Senior Notes Due 2024 between the Company, the Guarantors, and
J.P. Morgan Chase Bank, a New York banking corporation, as Trustee (incorporated by
reference to Exhibit 4.1 to Form 10-Q dated May 5, 2004).4.5
    
    Registration Rights Agreement as of March 31, 2004 by and between Grey Wolf,
Inc., the Guarantors, and the Initial Purchasers of the Floating Rate Contingent
Convertible Senior Notes due 2024 (incorporated by reference to Exhibit 4.2 to the
Quarterly Report on Form 10-Q filed May 5, 2004).4.6
    
    Second Supplemental Indenture, dated as of March 31, 2004, relating to the
3.75% Contingent Convertible Senior Notes due 2023 between the Company, the
Guarantors, and JP Morgan Chase Bank, a New York Banking Corporation, as Trustee
(incorporated by reference to Exhibit 4.3 to the Quarterly Report on Form 10-Q filed
May 5, 2004).* 31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)* 31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a)** 32.1
    
    Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 of Thomas P. Richards, Chairman, President
and Chief Executive Officer and David W. Wehlmann, Executive Vice President and Chief
Financial Officer.
 
 *
    
    Filed herewith**
    
    Furnished, not filed, in accordance with Item 601(b)(32) of Regulation S-K. -29-




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##### Table of Contents



SIGNATURES
 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
  Date: May 7, 2007
    
    By:
    
    /s/ David W. WehlmannDavid W. WehlmannExecutive Vice President andChief Financial OfficerDate: May 7, 2007
    
    By:
    
    /s/ Kent D. CauleyKent D. CauleyVice President and Controller
 -30-




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##### Table of Contents



Exhibit Index
 Exhibits
    
    Description of Exhibit3.1
    
    Articles of Incorporation of Grey Wolf, Inc., as amended (incorporated herein
by reference to Exhibit 3.1 to Form 10-Q dated May 12, 1999).3.2
    
    By-Laws of Grey Wolf, Inc., as amended (incorporated herein by reference to
Exhibit 99.1 to Form 8-K dated March 23, 1999).4.1
    
    Rights Agreement dated as of September 21, 1998 by and between the Company
and American Stock Transfer and Trust Company as Rights Agent (incorporated herein by
reference to Exhibit 4.1 to Form 8-K filed September 22, 1998).4.2
    
    Indenture, dated as of May 7, 2003, relating to the 3.75% Contingent
Convertible Senior Notes due 2023 between the Company, the Guarantors, and JPMorgan
Chase Bank, a New York Banking Corporation, as Trustee (incorporated herein by
reference to Exhibit 4.2 to the Companys Registration Statement on Form S-3 No.
333-106997 filed July 14, 2003).4.3
    
    Supplemental Indenture, dated as of May 22, 2003, relating to the 3.75%
Contingent Convertible Senior Notes due 2023 between the Company, the Guarantors, and
JPMorgan Chase Bank, a New York Banking Corporation, as Trustee (incorporated herein
by reference to Exhibit 4.3 to the Companys Registration Statement on Form S-3 No.
333-106997 filed July 14, 2003).4.4
    
    Indenture, dated as of March 31, 2004, relating to the Floating Rate
Contingent Convertible Senior Notes Due 2024 between the Company, the Guarantors, and
J.P. Morgan Chase Bank, a New York banking corporation, as Trustee (incorporated by
reference to Exhibit 4.1 to Form 10-Q dated May 5, 2004).4.5
    
    Registration Rights Agreement as of March 31, 2004 by and between Grey Wolf,
Inc., the Guarantors, and the Initial Purchasers of the Floating Rate Contingent
Convertible Senior Notes due 2024 (incorporated by reference to Exhibit 4.2 to the
Quarterly Report on Form 10-Q filed May 5, 2004).4.6
    
    Second Supplemental Indenture, dated as of March 31, 2004, relating to the
3.75% Contingent Convertible Senior Notes due 2023 between the Company, the
Guarantors, and JP Morgan Chase Bank, a New York Banking Corporation, as Trustee
(incorporated by reference to Exhibit 4.3 to the Quarterly Report on Form 10-Q filed
May 5, 2004).* 31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)* 31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a)** 32.1
    
    Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 of Thomas P. Richards, Chairman, President and Chief Executive
Officer and David W. Wehlmann, Executive Vice President and Chief Financial Officer.
 
 *
    
    Filed herewith**
    
    Furnished, not filed, in accordance with Item 601(b)(32) of Regulation S-K.