##### 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, 2006
 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
   o o o
  Yes o
    
    No þ




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##### Table of Contents



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 FinancialCondition and Results of Operations
    
    
    16Item 3.
    
    Quantitative and Qualitative Disclosure about Market Risk
    
    
    27Item 4.
    
    Controls and Procedures
    
    
    28Part II.
    
    Other InformationItem 1.
    
    Legal Proceedings
    
    
    28Item 1A.
    
    Risk Factors
    
    
    28Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    28Item 3.
    
    Defaults Upon Senior Securities
    
    
    28Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    28Item 5.
    
    Other Information
    
    
    29Item 6.
    
    Exhibits
    
    
    30Certification of CEO pursuant to Rule 13a-14(a)Certification of CFO pursuant to Rule 13a-14(a)Certification pursuant to 18 U.S.C. Section 1350
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grey wolf, inc. and subsidiaries
 
 Consolidated Balance Sheets
  March 31
    
    
    December 31,2006
    
    
    2005(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    214,861
    
    
    $
    173,145Restricted cash
    
    
    788
    
    
    
    780Accounts receivable, net of allowance of $2,674
    
    
    183,481
    
    
    
    159,438Prepaids and other current assets
    
    
    5,388
    
    
    
    8,010Deferred tax assets
    
    
    4,379
    
    
    
    4,222Total current assets
    
    
    408,897
    
    
    
    345,595Property and equipment:Land, buildings and improvements
    
    
    6,728
    
    
    
    6,530Drilling equipment
    
    
    951,155
    
    
    
    934,648Furniture and fixtures
    
    
    4,336
    
    
    
    4,217Total property and equipment
    
    
    962,219
    
    
    
    945,395Less: accumulated depreciation
    
    
    (458,668
    )
    
    
    (445,430
    )Net property and equipment
    
    
    503,551
    
    
    
    499,965Rigs held for sale, net
    
    
    
    
    
    
    5,524Goodwill
    
    
    10,377
    
    
    
    10,377Other noncurrent assets, net
    
    
    19,764
    
    
    
    7,574$
    942,589
    
    
    $
    869,035LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable-trade
    
    $
    47,420
    
    
    $
    61,087Accrued workers compensation
    
    
    6,668
    
    
    
    6,575Payroll and related employee costs
    
    
    6,407
    
    
    
    12,131Accrued interest payable
    
    
    2,323
    
    
    
    2,156Current income taxes payable
    
    
    33,973
    
    
    
    6,141Other accrued liabilities
    
    
    10,804
    
    
    
    7,059Total current liabilities
    
    
    107,595
    
    
    
    95,149Contingent convertible senior notes
    
    
    275,000
    
    
    
    275,000Other long-term liabilities
    
    
    13,989
    
    
    
    12,403Deferred income taxes
    
    
    120,175
    
    
    
    117,251Commitments 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; 300,000,000
shares authorized; 194,454,249 and 192,625,650
issued and outstanding, respectively
    
    
    19,446
    
    
    
    19,263Additional paid-in capital
    
    
    376,178
    
    
    
    374,012Retained earnings (deficit)
    
    
    30,206
    
    
    
    (24,043
    )Total shareholders equity
    
    
    425,830
    
    
    
    369,232$
    942,589
    
    
    $
    869,035
 See accompanying notes to consolidated financial statements
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grey wolf, inc. and subsidiaries
 
 Consolidated Statements of Operations
   Three Months EndedMarch 31,2006
    
    
    2005Contract drilling revenue
    
    $
    222,879
    
    
    $
    149,992Costs and expenses:Drilling operations
    
    
    122,860
    
    
    
    92,935Depreciation and amortization
    
    
    17,148
    
    
    
    14,302General and administrative
    
    
    5,317
    
    
    
    3,922Gain on sale of assets
    
    
    (9,515
    )
    
    
    (18
    )Total costs and expenses
    
    
    135,810
    
    
    
    111,141Operating income
    
    
    87,069
    
    
    
    38,851Other income (expense):Interest income
    
    
    2,116
    
    
    
    432Interest expense
    
    
    (3,269
    )
    
    
    (2,599
    )Other expense, net
    
    
    (1,153
    )
    
    
    (2,167
    )Income before income taxes
    
    
    85,916
    
    
    
    36,684Income tax expense:Current
    
    
    28,900
    
    
    
    1,172Deferred
    
    
    2,767
    
    
    
    12,468Total income tax expense
    
    
    31,667
    
    
    
    13,640Net income
    
    $
    54,249
    
    
    $
    23,044Net income per common share (Note 2):Basic
    
    $
    0.28
    
    
    $
    0.12Diluted
    
    $
    0.24
    
    
    $
    0.10Weighted average common shares outstanding:Basic
    
    
    192,541
    
    
    
    190,273Diluted
    
    
    236,001
    
    
    
    234,344
 See accompanying notes to consolidated financial statements
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GREY WOLF, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Shareholders Equity and Comprehensive Income
  CommonStock,
    
    
    AdditionalCommon
    
    
    $0.10 Par
    
    
    Paid-in
    
    
    Retained EarningsShares
    
    
    Value
    
    
    Capital
    
    
    (Deficit)
    
    
    TotalBalance, December 31, 2004
    
    
    190,136
    
    
    
    19,014
    
    
    
    363,148
    
    
    
    (144,680
    )
    
    
    237,482Exercise of stock options
    
    
    2,292
    
    
    
    229
    
    
    
    7,844
    
    
    
    
    
    
    
    8,073Tax benefit of stock
option exercises
    
    
    
    
    
    
    
    
    
    
    2,842
    
    
    
    
    
    
    
    2,842Issuance of restricted stock
    
    
    198
    
    
    
    20
    
    
    
    (20
    )
    
    
    
    
    
    
    Stock-based compensation
expense
    
    
    
    
    
    
    
    
    
    
    198
    
    
    
    
    
    
    
    198Comprehensive net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120,637
    
    
    
    120,637Balance, December 31, 2005
    
    
    192,626
    
    
    
    19,263
    
    
    
    374,012
    
    
    
    (24,043
    )
    
    
    369,232Exercise of stock options
    
    
    290
    
    
    
    29
    
    
    
    967
    
    
    
    
    
    
    
    996Tax benefit of stock
option exercises
    
    
    
    
    
    
    
    
    
    
    403
    
    
    
    
    
    
    
    403Issuance of restricted stock
    
    
    1,539
    
    
    
    154
    
    
    
    (154
    )
    
    
    
    
    
    
    Stock-based compensation
expense
    
    
    
    
    
    
    
    
    
    
    950
    
    
    
    
    
    
    
    950Comprehensive net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,249
    
    
    
    54,249Balance, March 31, 2006
(Unaudited)
    
    
    194,455
    
    
    $
    19,446
    
    
    $
    376,178
    
    
    $
    30,206
    
    
    $
    425,830
 See accompanying notes to consolidated financial statements
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grey wolf, inc. and subsidiaries
 
 Consolidated Statements of Cash Flows
   Three Months EndedMarch 31,2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    54,249
    
    
    $
    23,044Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    17,148
    
    
    
    14,302Deferred income taxes
    
    
    2,767
    
    
    
    12,027Gain on sale of assets
    
    
    (9,515
    )
    
    
    (18
    )Stock-based compensation expense
    
    
    950
    
    
    
    37Excess tax benefit of stock option exercises
    
    
    (225
    )
    
    
    446Net effect of changes in assets and liabilities
related to operating accounts
    
    
    138
    
    
    
    (9,704
    )Cash provided by operating activities
    
    
    65,512
    
    
    
    40,134Cash flows from investing activities:Property and equipment additions
    
    
    (27,985
    )
    
    
    (24,848
    )Proceeds from sale of property and equipment
    
    
    15,641
    
    
    
    529Deposits for new rig purchases
    
    
    (12,673
    )
    
    
    Cash used in investing activities
    
    
    (25,017
    )
    
    
    (24,319
    )Cash flows from financing activities:Proceeds from exercise of stock options
    
    
    996
    
    
    
    1,321Excess tax benefit of stock option exercises
    
    
    225
    
    
    
    Cash provided by financing activities
    
    
    1,221
    
    
    
    1,321Net increase in cash and cash equivalents
    
    
    41,716
    
    
    
    17,136Cash and cash equivalents, beginning of period
    
    
    173,145
    
    
    
    71,710Cash and cash equivalents, end of period
    
    $
    214,861
    
    
    $
    88,846Supplemental cash flow disclosure:Cash paid for interest
    
    $
    2,887
    
    
    $
    769Cash paid for taxes
    
    $
    625
    
    
    $
    170
 See accompanying notes to consolidated financial statements
 - 6 -




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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 31,2006
    
    
    2005(In thousands, except per share amounts)Numerator:Net income
    
    $
    54,249
    
    
    $
    23,044Add interest expense on contingent
convertible senior notes,
net of related tax effects
    
    
    1,902
    
    
    
    1,495Adjusted net incomediluted
    
    $
    56,151
    
    
    $
    24,539Denominator:Weighted average common
shares outstanding
    
    
    192,541
    
    
    
    190,273Effect of dilutive securities:Options  treasury stock method
    
    
    893
    
    
    
    1,614Restricted stock  treasury stock method
    
    
    110
    
    
    
    Contingent convertible senior notes
    
    
    42,457
    
    
    
    42,457Weighted average common shares outstanding-diluted
    
    
    236,001
    
    
    
    234,344Earnings per common share:Basic
    
    $
    0.28
    
    
    $
    0.12Diluted
    
    $
    0.24
    
    
    $
    0.10
  Share-Based Payment Arrangements
  - 8 -




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GREY WOLF, INC. AND SUBSIDIARIES  Notes to Consolidated Financial Statements
    Weighted-AverageWeighted-Average
    
    
    Remaining
    
    
    Aggregate IntrinsicShares
    
    
    Exercise Price
    
    
    Contractual Life(1)
    
    
    Value(in thousands)
    
    
    
    
    
    
    
    
    
    
    (in thousands)Outstanding at January 1, 2006
    
    
    4,253
    
    
    $
    3.83Granted
    
    
    340
    
    
    
    7.34Exercised
    
    
    (290
    )
    
    
    3.44Forfeited
    
    
    (33
    )
    
    
    4.67Outstanding at March 31, 2006
    
    
    4,270
    
    
    $
    4.12
    
    
    
    6.44
    
    
    $
    14,157Exercisable at March 31, 2006
    
    
    2,395
    
    
    $
    3.69
    
    
    
    5.30
    
    
    $
    8,972
 
 (1)
    
    Represents weighted average remaining contractual life in years.   - 9 -




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GREY WOLF, INC. AND SUBSIDIARIES  Notes to Consolidated Financial Statements
   Weighted-AverageGrant-Date FairShares
    
    
    Value(in thousands)Non-vested at January 1, 2006
    
    
    198
    
    
    $
    5.73Granted
    
    
    1,551
    
    
    
    7.34Forfeited
    
    
    (12
    )
    
    
    5.60Non-vested at March 31, 2006
    
    
    1,737
    
    
    $
    7.17
   Three MonthsEndedMarch 31,2005Net income, as reported
    
    $
    23,044Add: Stock-based employee compensation expense included
in reported net income, net of related tax effects
    
    
    23Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards,
net of related tax effects
    
    
    (603
    )Pro forma net income
    
    $
    22,464Basic earnings per shareAs reported
    
    $
    0.12Pro forma
    
    $
    0.12Diluted earnings per shareAs reported
    
    $
    0.10Pro forma
    
    $
    0.10
  - 10 -




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GREY WOLF, INC. AND SUBSIDIARIES  Notes to Consolidated Financial Statements
  Recent Accounting Pronouncements
  (3)
    
    Accounting for Income Taxes
   (4)
    
    Long-Term Debt
  March 31,
    
    
    December 31,2006
    
    
    20053.75% Contingent Convertible
Senior Notes due May 2023
    
    $
    150,000
    
    
    $
    150,000Floating Rate Contingent Convertible
Senior Notes due April 2024
    
    
    125,000
    
    
    
    125,000275,000
    
    
    
    275,000Less current maturities
    
    
    
    
    
    
    Long-term debt
    
    $
    275,000
    
    
    $
    275,000
 Floating Rate Notes
  - 11 -




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GREY WOLF, INC. AND SUBSIDIARIES  Notes to Consolidated Financial Statements
    3.75% Notes
     CIT Facility
  - 12 -




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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.
 - 13 -




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GREY WOLF, INC. AND SUBSIDIARIES  Notes to Consolidated Financial Statements
    (8)
    
    Concentrations
   (9)
    
    Goodwill and Intangible Assets
  - 14 -




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GREY WOLF, INC. AND SUBSIDIARIES  Notes to Consolidated Financial Statements
  (10)
    
    Sale of Rigs
  (11)
    
    Subsequent Event
  - 15 -




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GREY WOLF, INC. AND SUBSIDIARIES
 Managements Discussion and Analysis of Financial
 
 Condition and Results of Operations
  Overview
    Rig Activity
  2004
    
    2005
    
    2006DomesticLand Rig
    
    Full
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Full
    
    
    
    
    
    4/1Count
    
    Year
    
    Q-1
    
    Q-2
    
    Q-3
    
    Q-4
    
    Year
    
    Q-1
    
    to 4/28Baker
Hughes
    
    
    1,074
    
    
    
    1,153
    
    
    
    1,218
    
    
    
    1,307
    
    
    
    1,375
    
    
    
    1,263
    
    
    
    1,417
    
    
    
    1,480Grey Wolf
    
    
    85
    
    
    
    98
    
    
    
    99
    
    
    
    103
    
    
    
    108
    
    
    
    102
    
    
    
    109
    
    
    
    109
  - 16 -




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Term Contracts
   Drilling and Contract Rates
   Turnkey and Footage Contract Activity
   Financial Outlook
  - 17 -




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- 18 -




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Critical Accounting Policies
  Property and Equipment
  Impairment of Long-Lived Assets
   - 19 -




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Goodwill and Other Intangible Assets
   Revenue Recognition
  Insurance Accruals
  - 20 -




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Income Taxes
   Financial Condition and Liquidity
  March 31, 2006
    
    
    December 31, 2005(Unaudited)(Dollars in thousands)Amount
    
    
    %
    
    
    Amount
    
    
    %Working capital
    
    $
    301,302
    
    
    
    36
    
    
    $
    250,446
    
    
    
    32Property and equipment, net
    
    
    503,551
    
    
    
    61
    
    
    
    499,965
    
    
    
    65Goodwill
    
    
    10,377
    
    
    
    1
    
    
    
    10,377
    
    
    
    1Other noncurrent assets
    
    
    19,764
    
    
    
    2
    
    
    
    13,098
    
    
    
    2Total
    
    $
    834,994
    
    
    
    100
    
    
    $
    773,886
    
    
    
    100Long-term debt
    
    $
    275,000
    
    
    
    33
    
    
    $
    275,000
    
    
    
    35Other long-term liabilities
    
    
    134,164
    
    
    
    16
    
    
    
    129,654
    
    
    
    17Shareholders equity
    
    
    425,830
    
    
    
    51
    
    
    
    369,232
    
    
    
    48Total
    
    $
    834,994
    
    
    
    100
    
    
    $
    773,886
    
    
    
    100
 - 21 -




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Significant Changes in Financial Condition
  Floating Rate Notes
    3.75% Notes
   - 22 -




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CIT Facility
    - 23 -




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Cash Flow
  Three Months EndedMarch 31,2006
    
    
    2005(In thousands)(Unaudited)Net cash provided by (used in):Operating activities
    
    $
    65,512
    
    
    $
    40,134Investing activities
    
    
    (25,017
    )
    
    
    (24,319
    )Financing activities
    
    
    1,221
    
    
    
    1,321Net increase in cash
    
    $
    41,716
    
    
    $
    17,136
    Projected Cash Sources and Uses
   - 24 -




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Inflation and Changing Prices
  Results of Operations
  Reconciliation of Non-GAAP Financial Measures
  - 25 -




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ProjectedThree MonthsThree Months Ended
    
    
    EndingMarch 31,
    
    
    June 30,2006
    
    
    2005
    
    
    2006(In thousands)(Unaudited)Earnings before interest expense, taxes,
depreciation and amortization
    
    $
    106,333
    
    
    $
    53,585
    
    
    $
    107,800Depreciation and amortization
    
    
    (17,148
    )
    
    
    (14,302
    )
    
    
    (17,550
    )Interest expense
    
    
    (3,269
    )
    
    
    (2,599
    )
    
    
    (3,450
    )Total income tax expense
    
    
    (31,667
    )
    
    
    (13,640
    )
    
    
    (32,290
    )Net income
    
    $
    54,249
    
    
    $
    23,044
    
    
    $
    54,510
 Comparison of the Three Months Ended March 31, 2006 and 2005
  Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Three Months EndedMarch 31, 2006
    
    
    
    
    
    
    
    
    
    
    March 31, 2005Daywork
    
    
    Turnkey
    
    
    
    
    
    
    Daywork
    
    
    TurnkeyOperations
    
    
    Operations(1)
    
    
    Total
    
    
    Operations
    
    
    Operations(1)
    
    
    Total(Dollars in thousands except averages per rig day worked)(Unaudited)Rig days worked
    
    
    8,706
    
    
    
    1,080
    
    
    
    9,786
    
    
    
    7,990
    
    
    
    836
    
    
    
    8,826Contract drilling revenues
    
    $
    164,367
    
    
    $
    58,512
    
    
    $
    222,879
    
    
    $
    113,624
    
    
    $
    36,368
    
    
    $
    149,992Drilling operations expenses
    
    
    (84,481
    )
    
    
    (38,379
    )
    
    
    (122,860
    )
    
    
    (66,446
    )
    
    
    (26,489
    )
    
    
    (92,935
    )General and administrative
expenses
    
    
    (4,741
    )
    
    
    (576
    )
    
    
    (5,317
    )
    
    
    (3,562
    )
    
    
    (360
    )
    
    
    (3,922
    )Interest income
    
    
    1,882
    
    
    
    234
    
    
    
    2,116
    
    
    
    395
    
    
    
    37
    
    
    
    432Gain on sale of assets
    
    
    8,468
    
    
    
    1,047
    
    
    
    9,515
    
    
    
    16
    
    
    
    2
    
    
    
    18EBITDA
    
    $
    85,495
    
    
    $
    20,838
    
    
    $
    106,333
    
    
    $
    44,027
    
    
    $
    9,558
    
    
    $
    53,585Average per rig day worked:Contract drilling revenues
    
    $
    18,880
    
    
    $
    54,178
    
    
    $
    22,775
    
    
    $
    14,221
    
    
    $
    43,502
    
    
    $
    16,994EBITDA
    
    $
    9,820
    
    
    $
    19,294
    
    
    $
    10,866
    
    
    $
    5,510
    
    
    $
    11,433
    
    
    $
    6,071
 
 (1)
    
    Turnkey operations include the results from turnkey and footage contracts.  -26-




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##### Table of Contents



Daywork Operations
  Turnkey Operations
  Other
     
 Item 3. Quantitative and Qualitative Disclosure about Market Risk
 Interest Rate Risk.
 - 27 -




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##### Table of Contents



Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  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
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  -28-




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##### Table of Contents



Item 5. Other Information
  
    
    business strategy;
    
    demand for our services;
    
    spending by our customers;
    
    2006 rig activity and financial results;
    
    projected depreciation expense and interest expense;
    
    rigs expected to be engaged in turnkey and footage operations;
    
    reactivation, timing and cost of reactivation of rigs available for refurbishment;
    
    cost of building new rigs and delivery of these rigs;
    
    projected dayrates;
    
    the ability to recover our refurbishment costs or the purchase price of
rigs from term contracts;
    
    the availability and financial terms of term contracts;
    
    projected tax rate;
    
    expected insurance proceeds;
    
    wage rates and retention of employees;
    
    sufficiency of our capital resources and liquidity; and
    
    depreciation and capital expenditures in 2006.
  
    
    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.
  - 29 -




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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 - 30 -




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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 5, 2006
    
    By:
    
    /s/ David W. WehlmannDavid W. WehlmannExecutive Vice President andChief Financial OfficerDate: May 5, 2006
    
    By:
    
    /s/ Kent D. CauleyKent D. CauleyVice President and Controller
 - 31 -




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##### Table of Contents



Index to 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