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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 11-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the transition period from  to
 Commission file number 001-08226
 A.
    
    Full title of the plan and the address of the plan, if different from that of
the issuer named below:
 GREY WOLF DRILLING COMPANY
L.P. 401(K) PLAN
 B.
    
    Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
 GREY WOLF, INC.




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GREY WOLF DRILLING COMPANY L.P. 401(k) PLAN
 Table of Contents
 PageReport of Independent Registered Public Accounting Firm
    
    
    1Statements of Net Assets Available for Benefits, December 31, 2006 and 2005
    
    
    2Statements of Changes in Net Assets Available for Benefits, Years ended December 31, 2006 and 2005
    
    
    3Notes to Financial Statements
    
    
    4Supplemental Schedules:Schedule 1  Schedule H, Line 4a  Schedule of Delinquent Participant Contributions, Year ended December
31, 2006
    
    
    11Schedule 2  Schedule H, Line 4i  Schedule of Assets (Held at End of Year), December 31, 2006
    
    
    12Consent of Independent Registered Public Accounting Firm




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Report of Independent Registered Public Accounting Firm
 
      
 1




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GREY WOLF DRILLING COMPANY L.P. 401(k) PLAN
 
   2006
    
    
    2005Assets:Investments, at fair value
    
    $
    27,513,924
    
    
    $
    24,045,772Non interest-bearing cash
    
    
    101,751
    
    
    
    Participant contributions receivable
    
    
    80,910
    
    
    
    88,693Company contributions receivable
    
    
    42,228
    
    
    
    54,064Total assets
    
    
    27,738,813
    
    
    
    24,188,529Liabilities:Pending trades payable
    
    
    32,001
    
    
    
    Total liabilities
    
    
    32,001
    
    
    
    Net assets available for benefits, at fair value
    
    
    27,706,812
    
    
    
    24,188,529Adjustment from fair value to contract value for fully benefit
responsive investment contracts
    
    
    77,504
    
    
    
    108,840Net assets available for benefits
    
    $
    27,784,316
    
    
    $
    24,297,369
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GREY WOLF DRILLING COMPANY L.P. 401(k) PLAN
 
   2006
    
    
    2005Contributions:Participant
    
    $
    3,083,241
    
    
    
    2,207,126Company, net of forfeitures
    
    
    1,753,187
    
    
    
    1,347,698Rollover
    
    
    41,797
    
    
    
    34,680Total contributions
    
    
    4,878,225
    
    
    
    3,589,504Investment income (loss):Net (depreciation) appreciation in fair value of common stock
    
    
    (118,631
    )
    
    
    485,643Net appreciation (depreciation) in fair value of mutual funds
    
    
    510,621
    
    
    
    (16,201
    )Net appreciation in fair value of collective trust funds
    
    
    634,022
    
    
    
    562,133Interest and dividends
    
    
    651,833
    
    
    
    533,120Total investment income
    
    
    1,677,845
    
    
    
    1,564,695Benefits paid to participants
    
    
    (3,044,651
    )
    
    
    (2,779,709
    )Administrative and investment expenses
    
    
    (24,472
    )
    
    
    (29,966
    )Net increase in net assets available for plan benefits
    
    
    3,486,947
    
    
    
    2,344,524Net assets available for benefits:Beginning of year
    
    
    24,297,369
    
    
    
    21,952,845End of year
    
    $
    27,784,316
    
    
    
    24,297,369
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GREY WOLF DRILLING COMPANY L.P. 401(k) PLAN
 
   (1)
    
    The PlanThe following brief description of the Grey Wolf Drilling Company L.P. 401(k) Plan (the Plan)
is provided for general informational purposes only. Participants should refer to the plan
agreement for a more complete description of the Plans provisions.
 (a)
    
    GeneralThe Plan is a defined contribution plan covering all employees of Grey Wolf, Inc. (the
Company or the Sponsor) who have one year of service and are age 18 or older except
employees covered by a collective bargaining agreement and employees who are nonresident
aliens with no United States source income. Effective January 1, 2006, the Plan was
amended to permit salaried employees the ability to participate the first of the month
following the date of hire. Effective April 1, 2002, the Company adopted the American
Express Volume Submitted Plan #VS322434. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended (ERISA). On August 1, 2005,
the Plan began being operated by Ameriprise Retirement Services as a result of a spin-off
from American Express. In addition, funds styled AXP (American Express) were changed to
RVS (River Source).On June 1 2006, Ameriprise Financial Services, Inc. sold its defined contribution plan
record keeping business to Wachovia Corp.(b)
    
    Administration and InvestmentsThe Plan is administered by the Company and advised by a committee (the Benefits
Administrative Committee). American Express Trust Company was the name of the trustee of
the Plan until August 1, 2005, when it changed its name to Ameriprise Trust Company.During 2006 the Benefits Administrative Committee added one mutual fund and replaced
three mutual funds. At December 31, 2006, participants can direct their accounts into
nine mutual funds, five collective trust funds and Grey Wolf, Inc. common stock. Only 25%
of the participants total contributions and Company matching contributions may be
directed into Grey Wolf, Inc. common stock. Participants cannot transfer any portion of
their account into Grey Wolf, Inc. common stock. Amounts may be transferred out of Grey
Wolf, Inc. common stock; however, once amounts are transferred out they cannot be
transferred back.(c)
    
    ContributionsThe Plan provides for participant pre-tax contributions from 1% to 80% of covered
compensation, subject to Internal Revenue Service (IRS) limitations and after-tax
contributions from 10% to 15%. The total of pre-tax and after-tax contributions may not
exceed 95%. Participants age 50 or older during the plan year may also elect to make a
catch-up contribution, subject to certain IRS limits ($5,000 in 2006 and $4,000 in
2005). With the adoption of the 401(k) Safe-Harbor Provisions effective January 1, 2005,
Company matching contributions were mandatory. For both 2006 and 2005 the Company matched
100% of each participants contribution, up to the first 3% of covered compensation, plus
50% of the next 3% of covered compensation. Catch-up contributions are not eligible for
company matching contribution. Participants may also elect to rollover distributions from
a former employers qualified retirement plan or individual retirement account.
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GREY WOLF DRILLING COMPANY L.P. 401(k) PLAN
   (d)
    
    Participant AccountsUnder the Plan, each participants account is credited with the participants
contribution, the Companys matching contribution, and an allocation of investment income
(loss), net of administrative expenses. Investment income (loss) allocations are based on
the participants weighted average account balance during the period. The benefit to
which a participant is entitled is the benefit that can be provided from the
participants vested account.(e)
    
    Participant Loans Receivable and Inservice WithdrawalsParticipants are allowed to borrow a minimum of $1,000 up to a maximum equal to the
lesser of $50,000 reduced by, if any, the highest outstanding loan balance within the
previous 12-month period or 50% of the participants vested account balance. Loans are
secured by the balance in the participant account and bear interest at the prime rate at
the end of the quarter plus 1%. Furthermore, loan repayments of amortized principal and
interest must be made in level payments, not less frequently than quarterly and over a
period not to exceed five years from the date of the loan, unless used to acquire a
principal residence. As of December 31, 2006, interest rates range from 4% to 9.25%.
Maturity dates on outstanding loans at December 31, 2006 range from January 2007 to
March 2016.The Plan provides for various in-service withdrawals, as defined.(f)
    
    VestingParticipants are immediately vested in their contributions and the related earnings
thereon. Effective January 1, 2005, employees are 100% vested in the Companys
contributions. Prior to January 1, 2005, vesting in the Companys matching contributions
for terminated employees was 0% for less than one year of service, graduating 20% per
year to 100% for five or more years of service. Upon death or permanent total disability,
the participant or beneficiary become 100% vested in the Companys contribution.(g)
    
    Payment of BenefitsOn termination of service due to death, disability, retirement, or termination
participants or their beneficiaries may elect to receive an amount equal to the value of
the participants account in a lump sum.Effective March 28, 2005, if the value of the participants vested account balance is
$1,000 or less, excluding rollover account balances, no deferral of payment is allowed.
Ameriprise Trust Company will notify the participant to submit a distribution request
form within 30 days. If no form is received by the end of the notification period,
Ameriprise Trust Company will automatically pay the distribution to the participant as
soon as administratively feasible, withholding applicable federal and state taxes.If the value of the participants vested account balance is greater than $1,000, but not
more than $5,000, excluding rollover account balances, no deferral of payment is allowed.
Ameriprise Trust Company will notify the participant to submit a distribution request
form within 30 days. If no form is received by the end of the notification period,
Ameriprise Trust Company will automatically make a direct rollover of the participants vested account balance to the Plans
designated independent retirement account provider as soon as administratively feasible
after the notification period.
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GREY WOLF DRILLING COMPANY L.P. 401(k) PLAN
       (2)
    
    Significant Accounting Policies
 (a)
    
    Accounting BasisThe financial statements are presented on the accrual basis of accounting in accordance
with accounting principles generally accepted in the United States of America. Benefits
payments are recorded when paid.(b)
    
    New Accounting PronouncementAs of December 31, 2006, the Plan adopted Financial Accounting Standards Board (FASB)
Staff Position FSP AAG INV-1 and Statement of Position No. 94-4-1, Reporting of Fully
Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to
the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and
Pension Plans (the FSP). The FSP states that investment contracts held by a defined
contribution plan are required to be reported at fair value. However, contract value is
the relevant measurement attribute for that portion of net assets available for benefits
of a defined contribution plan attributable to fully benefit-responsive investment
contracts because contract value is the amount participants would receive if they were to
initiate permitted transactions under the terms of the Plan. The Plan invests in
investment contracts through a collective trust fund. As required by the FSP, the
statement of net assets available for benefits presents the fair value of the Plans
investments in the collective trust fund as well as the adjustment of the investment
in the collective trust fund from fair value to contract value relating to the investment
contracts. The statement of changes in net assets available for benefits is prepared
on a contract value basis. The FSP was applied retroactively to the prior period
presented on the statement of net assets available for benefits as of December 31, 2005.
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GREY WOLF DRILLING COMPANY L.P. 401(k) PLAN
   (c)
    
    Use of EstimatesThe preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities and changes
therein and disclosure of contingent assets and liabilities. Actual results could differ
from those estimates.(d)
    
    Administrative ExpensesCertain administrative expenses of the Plan may be paid by the Company at its discretion
and, if not paid by the Company, shall be paid by the Plan. Quarterly investment, loan
and withdrawal fees are paid by participants.(e)
    
    Valuation of Investments and Income RecognitionInvestments in mutual funds and Grey Wolf, Inc. common stock are valued at fair value
based on quoted market prices in an active market. Investments in the collective trust
funds are valued at fair value based upon the quoted market values of the underlying
assets where available. Participant loans are valued at cost which approximates fair
value. Purchases and sales are recorded on a trade-date basis.The Plans investment in the River Source Trust Income Fund II (the Fund), formerly the
American Express Trust Income Fund II, which is a collective trust fund that invests in
guaranteed investment contracts (GICs) is recorded at fair value based upon information
provided by the issuer. Fair value is calculated by the issuer using a discounted cash
flow model which considers recent fee bids as determined by recognized dealers, discount
rate and the duration of the underlying portfolio securities. The Plans investment in
the Fund is adjusted to contract value based upon information also provided by the
issuer. The contract value of the Plans interest in the Fund is equal to the principal
balance plus accrued interest less any withdrawals or expense charges. As provided in the
FSP, an investment contract is generally valued at contract value, rather than fair
value, to the extent it is fully benefit-responsive.Interest is recorded as earned and dividend income is recorded on the ex-dividend date.
Net appreciation (depreciation) in fair value of investments includes realized gains and
losses on investments sold during the year as well as appreciation (depreciation) of the
investments held at the end of the year.
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GREY WOLF DRILLING COMPANY L.P. 401(k) PLAN
   (3)
    
    InvestmentsThe following table represents fair value of individual investments which exceed 5% of the
Plans net assets at December 31:
 2006:RiverSource Trust Income Fund II ($12,618,349 Contract Value)
    
    $
    12,540,845The Growth Fund of America
    
    
    1,613,712Artisan International Investors Fund
    
    
    1,988,873Goldman Sachs Core Fixed Income Fund
    
    
    1,616,594Van Kampen Equity Income Fund
    
    
    1,420,492Participant loans
    
    
    1,579,8652005:RiverSource Trust Income Fund II ($11,403,644 Contract Value)
    
    $
    11,294,804RiverSource Trust Midcap Growth Fund II
    
    
    1,372,186RVS New Dimension Fund
    
    
    1,412,906Artisan International Investors Fund
    
    
    1,572,981Goldman Sachs Core Fixed Income Fund
    
    
    1,436,297Van Kampen Equity Income Fund
    
    
    1,296,098Grey Wolf, Inc.  common stock
    
    
    1,309,849Participant loans
    
    
    1,534,160
 (4)
    
    Risk and UncertaintiesThe Plan invests in mutual funds, collective trust funds and Company common stock. Investment
securities are exposed to various risks, such as interest rate, market, and credit risks. Due
to the level of risk associated with certain investment securities, it is at least reasonably
possible that changes in the value of investment securities will occur in the near term.(5)
    
    Grey Wolf, Inc. Common StockThe administrator or the designated investment manager is entitled to exercise voting rights
attributed to the shares of Grey Wolf, Inc. common stock, and will notify the trustee prior to
the time that such rights are to be exercised. The Plan allows the Company the opportunity to
sell treasury stock to the Plan. The purchase price paid by the Plan to the Company shall be
the closing price on the date of purchase. No fees, commissions, or similar charges are paid
by the Plan in conjunction with such purchases. During 2006 and 2005, the Plan purchased all
shares of Grey Wolf, Inc. common stock in the open market.(6)
    
    Plan TerminationThe Plan has been established to continue indefinitely. However, although it has not expressed
any intent to do so, the Company has the right to terminate the Plan, in whole or in part,
subject to the provisions of ERISA. In the event of termination, all amounts credited to the
accounts of the participants become fully vested and shall be distributed upon satisfaction of
all obligations of the Plan.
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GREY WOLF DRILLING COMPANY L.P. 401(k) PLAN
   (7)
    
    Tax StatusThe Plan received a favorable determination letter from the IRS dated January 13, 2005,
stating that the Plan is designed and is currently being operated in compliance with the
applicable requirements of the Internal Revenue Code of 1986, as amended (IRC). The Plan has
been amended since receiving the determination letter; however, the Benefits Administrative
Committee believes that the Plan is currently designed and being operated in compliance with
the applicable requirements of the IRC and that the Plan was qualified and the related trust
was tax-exempt as of December 31, 2006 and 2005.(8)
    
    Related-Party TransactionsThe Plan engaged in investment transactions with funds managed by the trustee. The trustee is
a party in interest with respect to the Plan. The Plan also holds shares of Grey Wolf, Inc.
common stock, the Plan sponsor, and a party in interest with respect to the Plan. These
transactions are covered by an exemption from the prohibited transaction provisions of ERISA
and the IRC.(9)
    
    Delinquent Participant ContributionsAs reported on schedule H, line 4a, schedule of delinquent participant contributions for the
year ended December 31, 2006, certain 2006 and 2005 participant contributions and participant
loan repayments were not remitted to the trust within the time frame specified by the
Department of Labors Regulation 29 CFR 2510.3-102, thus constituting nonexempt transactions
between the Plan and the Company for the years ended
December 31, 2006 and December 31, 2005.
On May 18, 2006, the Company remitted $18 of lost interest on the delinquent loan repayments.
On June 6, 2006, the Company remitted $280 of lost interest on the delinquent participant
contributions.(10)
    
    Reconciliation of Financial Statements to Form 5500The following is a reconciliation of net assets available for benefits per the financial
statements to the Form 5500:
 December 31,2006Net assets available for benefits per the financial statements
    
    $
    27,784,316Less adjustment from fair value to contract value for fully benefit responsive
investment contracts
    
    
    (77,504
    )Net assets available for benefits per the Form 5500
    
    $
    27,706,812
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GREY WOLF DRILLING COMPANY L.P. 401(k) PLAN
    Year endedDecember 31,2006Total investment income per the financial statements
    
    $
    1,677,845Less adjustment from fair value to contract value for fully benefit responsive
investment contracts
    
    
    (77,504
    )Total investment income per the Form 5500
    
    $
    1,600,341
 (11)
    
    Subsequent EventsEffective January 1, 2007, the Plan was amended to limit a participants investment in the
Grey Wolf, Inc. common stock fund. As a result of the amendment, no more than 10% of a
participants total contribution and company matching contribution may be invested in the
Grey Wolf, Inc. common stock fund.On June 1, 2006, Wachovia Bank, N.A. acquired the Ameriprise Trust Company 401(k)
recordkeeping business. As a result of this transaction, the trustee of the Plan changed
from Ameriprise Trust Company to Wachovia Bank, N.A. effective April 1, 2007.
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Schedule 1
 GREY WOLF DRILLING COMPANY L.P. 401(k) PLAN
 
   (b)(a)
    
    Relationship to plan,
    
    (c)
    
    (d)
    
    (e)Identity of
    
    employer or other
    
    Description of transaction,
    
    Amount on
    
    Lostparty involved
    
    party-in-interest
    
    including rate of interest
    
    line 4(a)
    
    InterestGrey Wolf, Inc.
    
    Plan sponsor
    
    2006 participant loan repayments
not deposited to Plan in a timely manner
(Interest rate: various)
    
    $117
    
    92005 participant contributions and loan 
repayments not deposited to Plan in a
timely manner. (Interest rate: various)
    
    2,120
    
    289
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Schedule 2
 GREY WOLF DRILLING COMPANY L.P. 401(k) PLAN
 
   Identity of issue, borrower,
    
    
    
    Currentlessor, or similar party
    
    Description of investments
    
    valueInterest-bearing cash (including money market accounts and certificates of deposit):* River Source Trust
    
    RVST Money Market II Fund
    
    $
    41,024Collective trust funds:American Express Trust Company collective investment funds for Employee Benefit Trust:* River Source Trust
    
    473,520 units of River Source Trust
Income Fund II
    
    
    12,540,845* River Source Trust
    
    6,370 units of River Source Trust
Short-Term Horizon (25:75) Fund
    
    
    145,668* River Source Trust
    
    30,114 units of River Source Trust
Medium-Term Horizon (50:50) Fund
    
    
    879,161* River Source Trust
    
    17,007 units of River Source Trust
Long-Term Horizon (80:20) Fund
    
    
    547,869* River Source Trust
    
    72,968 units of River Source Trust
MidCap Growth Fund II
    
    
    1,350,926Subtotal collective trust funds
    
    
    15,464,469Mutual funds:Goldman Sachs
    
    164,623 units of Goldman Sachs Core Fixed
Income Fund
    
    
    1,616,594* River Source Funds
    
    106,364 units of RVS Diversified Equity Fund
    
    
    1,371,029* River Source Funds
    
    64,106 units of RVS S&P 500 Index Fund
    
    
    351,300Columbia Acorn
    
    12,798 units of Columbia Acorn Fund
    
    
    371,385Aston Funds
    
    25,609 units of Aston Montag
& Caldwell Growth Fund
    
    
    652,763Eclipse Funds
    
    2,781 units of Mainstay Small Cap Opportunity Fund
    
    
    58,008American Funds
    
    49,409 units of the Growth Fund of America
    
    
    1,613,712Van Kampen
Investments
    
    155,756 units of Van Kampen Equity Income Fund
    
    
    1,420,492Artisan Funds, Inc.
    
    68,605 units of Artisan International Investors Fund
    
    
    1,988,873Subtotal mutual funds
    
    
    9,444,156Common stock:* Grey Wolf, Inc.
    
    143,500 shares of Grey Wolf, Inc. common stock
    
    
    984,410Participant Loans:* Participant loans
    
    Loans receivable bearing interest at rates from
4% to 9.25% and maturities ranging from
January 2007 through March 2016
    
    
    1,579,865Total investments (held at end of year)
    
    $
    27,513,924
 
 *
    
    Indicates a party in interest.  12




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SIGNATURES
 The Plan
 Date: June 29, 2007
    
    GREY WOLF DRILLINGCOMPANY L.P. 401(k) PLANBY:
    
    /s/ Donald J. Guedry, Jr.Donald J. Guedry, Jr.Vice President and Treasurer forGrey Wolf, Inc. andGrey Wolf Drilling Company L.P.401(k) Plan Benefits Administrative Committee Member
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INDEX TO EXHIBITS
 Exhibit number
    
    Description23.1
    
    Consent of Independent Registered Public Accounting Firm
 14