<PAGE>
================================================================================


                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

<Table>
<S>                                                    <C>
For the quarterly period ended September 30, 2001      Commission File Number 1-8226
</Table>



                             [GREY WOLF, INC. LOGO]



                                 GREY WOLF, INC.
             (Exact name of registrant as specified in its charter)


                TEXAS                               74-2144774
      (State or jurisdiction of                  (I.R.S. Employer
      incorporation or organization)          Identification number)


     10370 RICHMOND AVENUE, SUITE 600
            HOUSTON, TEXAS                             77042
 (Address of principal executive offices)            (Zip Code)

       Registrant's telephone number, including area code: (713) 435-6100


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                    Yes  X   No
                                        ---     ---

The number of shares of the Registrant's Common Stock, par value $.10 per share,
outstanding at November 8, 2001 was 180,683,661.



================================================================================


                                  Page 1 of 22
<PAGE>

                        GREY WOLF, INC. AND SUBSIDIARIES

                                TABLE OF CONTENTS


<Table>
<Caption>

                                                                                                            PAGE
                                                                                                            ----
<S>                                                                                                         <C>
PART I.       Financial Information

              Item 1.      Financial Statements

                           Consolidated Balance Sheets                                                        3

                           Consolidated Statements of Operations                                              4

                           Consolidated Statements of Shareholders' Equity and Comprehensive Income           5

                           Consolidated Statements of Cash Flows                                              6

                           Notes to Consolidated Financial Statements                                         7

              Item 2.      Management's Discussion and Analysis of Financial
                           Condition and Results of Operations                                               11

              Item 3.      Quantitative and Qualitative Disclosure about Market Risk                         19

PART II.      Other Information

              Item 1.      Legal Proceedings                                                                 20

              Item 2.      Changes in Securities and Use of Proceeds                                         20

              Item 3.      Defaults Upon Senior Securities                                                   20

              Item 4.      Submission of Matters to a Vote of Security Holders                               20

              Item 5.      Other Information                                                                 20

              Item 6.      Exhibits and Reports on Form 8-K                                                  20


              Signatures                                                                                     21
</Table>



                                      -2-
<PAGE>
                        GREY WOLF, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                    (Amounts in thousands, except share data)

<Table>
<Caption>

                                                                        September 30,    December 31,
                                                                            2001              2000
                                                                        -------------    -------------
                                                                        (Unaudited)
<S>                                                                     <C>              <C>
                                    ASSETS
Current assets:
    Cash and cash equivalents                                           $      77,398    $      51,569
    Restricted cash - insurance deposits                                          859              859
    Accounts receivable, net of allowance of $1,800                           106,103           61,729
    Prepaids and other current assets                                           2,218            3,190
                                                                        -------------    -------------
         Total current assets                                                 186,578          117,347
                                                                        -------------    -------------

Property and equipment:
    Land, buildings and improvements                                            5,137            5,103
    Drilling equipment                                                        669,802          606,762
    Furniture and fixtures                                                      2,890            2,464
                                                                        -------------    -------------
         Total property and equipment                                         677,829          614,329
    Less: accumulated depreciation and amortization                          (251,811)        (227,468)
                                                                        -------------    -------------
         Net property and equipment                                           426,018          386,861

Other noncurrent assets                                                         5,763            6,658
                                                                        -------------    -------------
                                                                        $     618,359    $     510,866
                                                                        =============    =============

             LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Current maturities of long-term debt                                $         576    $         545
    Accounts payable-trade                                                     33,736           24,447
    Accrued workers' compensation                                               4,281            4,805
    Payroll and related employee costs                                         12,093            6,795
    Accrued interest payable                                                    5,677           11,167
    Other accrued liabilities                                                   7,311            9,559
                                                                        -------------    -------------
         Total current liabilities                                             63,674           57,318
                                                                        -------------    -------------

Senior notes                                                                  249,505          249,440
Long-term debt, net of current maturities                                       1,145              411
Other long-term liabilities                                                     5,564            2,158
Deferred income taxes                                                          62,224           28,123

Commitments and contingent liabilities                                             --               --

Shareholders' equity:
    Series B Junior Participating Preferred stock, $1 par value;
      250,000 shares authorized; none outstanding                                  --               --
    Common stock, $.10 par value; 300,000,000 shares authorized;
      180,683,661 and 179,880,591 issued and outstanding, respectively         18,068           17,988
    Additional paid-in capital                                                328,242          325,417
    Accumulated comprehensive income adjustments                                   --             (454)
    Accumulated deficit                                                      (110,063)        (169,535)
                                                                        -------------    -------------
         Total shareholders' equity                                           236,247          173,416
                                                                        -------------    -------------
                                                                        $     618,359    $     510,866
                                                                        =============    =============
</Table>



          See accompanying notes to consolidated financial statements.


                                      -3-
<PAGE>




                        GREY WOLF, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (Amounts in thousands, except per share data)
                                   (Unaudited)


<Table>
<Caption>

                                                      Three Months Ended                    Nine Months Ended
                                                          September 30,                        September 30,
                                                 -------------------------------       -------------------------------
                                                    2001                2000              2001               2000
                                                 ------------       ------------       ------------       ------------
<S>                                              <C>                <C>                <C>                <C>
Revenues:
     Contract drilling                           $    125,119       $     73,373       $    335,174       $    187,019

Costs and expenses:
     Drilling operations                               66,638             59,680            184,061            156,063
     Depreciation and amortization                     10,336              9,231             30,404             27,122
     General and administrative                         2,586              2,093              7,235              5,818
     Provision for doubtful accounts                       --                 --                 --                 92
                                                 ------------       ------------       ------------       ------------
         Total costs and expenses                      79,560             71,004            221,700            189,095
                                                 ------------       ------------       ------------       ------------

Operating income (loss)                                45,559              2,369            113,474             (2,076)

Other income (expense):
     Interest income                                      570                935              1,813              2,080
     Gain on sale of assets                               125                 18                280                114
     Interest expense                                  (5,986)            (5,981)           (18,028)           (17,968)
     Other, net                                            --                  4               (448)               (28)
                                                 ------------       ------------       ------------       ------------
         Other income (expense), net                   (5,291)            (5,024)           (16,383)           (15,802)
                                                 ------------       ------------       ------------       ------------

Income (loss) before income taxes                      40,268             (2,655)            97,091            (17,878)

Income tax expense (benefit)
     Current                                            1,232                 --              2,256                 --
     Deferred                                          13,658               (324)            35,363             (4,383)
                                                 ------------       ------------       ------------       ------------
         Total income tax expense (benefit)            14,890               (324)            37,619             (4,383)
                                                 ------------       ------------       ------------       ------------

Net income (loss)                                $     25,378       $     (2,331)      $     59,472       $    (13,495)
                                                 ============       ============       ============       ============

Basic net income (loss) per common share         $       0.14       $      (0.01)      $       0.33       $      (0.08)
                                                 ============       ============       ============       ============

Diluted net income (loss) per common share       $       0.14       $      (0.01)      $       0.33       $      (0.08)
                                                 ============       ============       ============       ============

Basic weighted average
     common shares outstanding                        180,677            179,726            180,437            174,543
                                                 ============       ============       ============       ============

Diluted weighted average
     common shares outstanding                        181,908            179,726            182,626            174,543
                                                 ============       ============       ============       ============
</Table>





                                      -4-
<PAGE>

                        GREY WOLF, INC. AND SUBSIDIARIES

    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                             (Amounts in thousands)


<Table>
<Caption>
                                                    Common                                        Accumulated
                                                    Stock        Additional                      Comprehensive
                                    Common         $.10 Par       Paid-in                          Income
                                    Shares          Value         Capital         Deficit         Adjustments          Total
                                   ---------      ---------      ----------      ---------       -------------       ---------
<S>                                <C>            <C>            <C>             <C>             <C>                 <C>
Balance, December 31, 1999           165,167      $  16,516      $  270,527      $(161,012)      $        (454)      $ 125,577

    Issuance of common stock          13,000          1,300          50,334             --                  --          51,634

    Exercise of stock options          1,619            163           2,926             --                  --           3,089

    Tax benefit of stock
       option exercises                   --             --           1,410             --                  --           1,410

    Comprehensive net loss                --             --              --        (13,495)                 --         (13,495)
                                   ---------      ---------      ----------      ---------       -------------       ---------

Balance, September 30, 2000
    (Unaudited)                      179,786      $  17,979      $  325,197      $(174,507)      $        (454)      $ 168,215
                                   =========      =========      ==========      =========       =============       =========



Balance, December 31, 2000           179,881      $  17,988      $  325,417      $(169,535)      $        (454)      $ 173,416

    Exercise of stock options            802             80           1,563             --                  --           1,643

    Tax benefit of stock
       option exercises                   --             --           1,262             --                  --           1,262

    Cumulative foreign
       translation losses                 --             --              --             --                 454             454
    Net income                            --             --              --         59,472                  --          59,472
                                   ---------      ---------      ----------      ---------       -------------       ---------
    Comprehensive net income              --             --              --         59,472                 454          59,926
                                   ---------      ---------      ----------      ---------       -------------       ---------


Balance, September 30, 2001
    (Unaudited)                      180,683      $  18,068      $  328,242      $(110,063)      $          --       $ 236,247
                                   =========      =========      ==========      =========       =============       =========
</Table>


          See accompanying notes to consolidated financial statements.



                                      -5-
<PAGE>





                        GREY WOLF, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in thousands)
                                   (Unaudited)


<Table>
<Caption>

                                                                      Nine Months Ended
                                                                          September 30,
                                                                -------------------------------
                                                                    2001               2000
                                                                ------------       ------------
<S>                                                             <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                                            $     59,472       $    (13,495)
   Adjustments to reconcile net income (loss) to
      net cash provided by (used in) operating activities:
      Depreciation and amortization                                   30,404             27,122
      Deferred income taxes                                           34,101             (5,793)
      Gain on sale of assets                                            (280)              (114)
      Foreign exchange loss                                              448                 28
      Provision for doubtful accounts                                     --                 92
   Tax benefit of stock option exercises                               1,262              1,410
   Net effect of changes in assets and liabilities
      related to operating accounts                                  (32,770)           (12,432)
                                                                ------------       ------------
      Cash provided by (used in) operating activities                 92,637             (3,182)
                                                                ------------       ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Property and equipment additions                                  (71,040)           (19,247)
   Proceeds from sale of property and equipment                        1,759                120
                                                                ------------       ------------
      Cash used in investing activities                              (69,281)           (19,127)
                                                                ------------       ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from long-term debt                                        1,561                346
   Repayment of long-term debt                                          (731)              (878)
   Proceeds from exercise of stock options                             1,643              3,089
   Issuance of common stock                                               --             51,634
                                                                ------------       ------------
      Cash provided by financing activities                            2,473             54,191
                                                                ------------       ------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                             25,829             31,882
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                        51,569             20,500
                                                                ------------       ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                        $     77,398       $     52,382
                                                                ============       ============

SUPPLEMENTAL CASH FLOW DISCLOSURE

CASH PAID FOR INTEREST:                                         $     22,558       $     22,522
                                                                ============       ============
CASH PAID FOR TAXES:                                            $      1,844       $         --
                                                                ============       ============
</Table>








                                      -6-
<PAGE>




                        GREY WOLF, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

(1)      GENERAL

         Grey Wolf, Inc. (the "Company" or "Grey Wolf") is a Texas corporation
formed in 1980. Grey Wolf is a holding company with no independent assets or
operations, but through its subsidiaries is engaged in the business of providing
onshore contract drilling services to the oil and gas industry. The accompanying
unaudited consolidated financial statements have been prepared by the Company
and include the accounts of the Company and its majority-owned subsidiaries. In
the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments, which are of a normal recurring nature,
necessary to present fairly the Company's financial position as of September 30,
2001 and the results of operations and cash flows for the periods indicated. All
significant intercompany transactions have been eliminated. The results of
operations for the nine months ended September 30, 2001 and 2000 are not
necessarily indicative of the results for any other period or for the year as a
whole. These consolidated financial statements should be read in conjunction
with the Company's audited consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2000.

(2)      SIGNIFICANT ACCOUNTING POLICIES

Earnings Per Share

         Basic earnings per share ("EPS") is based on weighted average shares
outstanding without any dilutive effects considered. Diluted earnings per share
reflects dilution from all contingently issuable shares, including options,
warrants and convertible securities.

         A reconciliation of the weighted average common shares outstanding on a
basic and diluted basis is as follows:


<Table>
<Caption>

                                              Three Months Ended                  Nine Months Ended
                                                 September 30,                     September 30,
                                        ------------------------------      ------------------------------
                                            2001              2000             2001               2000
                                        ------------      ------------      ------------      ------------
                                               (In thousands)                       (In thousands)
                                                (Unaudited)                          (Unaudited)

<S>                                     <C>               <C>               <C>               <C>
Weighted average common shares
   outstanding - basic                       180,677           179,726           180,437           174,543

Effect of dilutive securities:
   Options - Treasury Stock Method             1,231                --             2,189                --
                                        ------------      ------------      ------------      ------------


Weighted average common shares
   outstanding - diluted                     181,908           179,726           182,626           174,543
                                        ============      ============      ============      ============
</Table>

         Options to purchase 4.1 million shares for the three months ended
September 30, 2001 and 998,500 shares for the three months ended March 31, 2001
and June 30, 2001 were not included in the computation of diluted EPS because
the options' exercise price was greater than the average market price of the
common shares.



                                      -7-
<PAGE>
                        GREY WOLF, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



         The Company incurred a net loss for the three and nine month periods
ended September 30, 2000 and has, therefore, excluded certain securities from
the computation of diluted earnings per share as the effect would be
anti-dilutive. Securities excluded from the computation of diluted earnings per
share for the three and nine month periods ended September 30, 2000 that could
potentially dilute basic earnings per share in the future were options to
purchase 7.4 million shares.

Recent Accounting Pronouncements

         In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 142, "Goodwill and Other
Intangible Assets," which changes how goodwill and other intangible assets are
accounted for subsequent to their initial recognition. Under this standard,
goodwill and other intangible assets having identifiable useful lives are no
longer amortized, but are subjected to periodic assessments of impairment. SFAS
No. 142 is effective for fiscal years beginning after December 15, 2001. The
Company does not anticipate the adoption of SFAS 142 will have a material impact
on its financial position or results of operation.

         In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations," which addressed financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. This statement applies to all entities that
have legal obligations associated with the retirement of long-lived assets that
result from the acquisition, construction, development or normal use of the
asset. SFAS 143 is effective for fiscal years beginning after June 15, 2002. The
Company does not expect the adoption of SFAS 143 to have a significant impact on
its financial condition or results of operations.

         In October 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Live Assets," which addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
While SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," it retains many
of the fundamental provisions of that statement. SFAS No. 144 also supersedes
the accounting and reporting provisions of APB Opinion No. 30, "Reporting the
Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," for the disposal of a segment of a business. SFAS No. 144 is
effective for fiscal years beginning after December 15, 2001 and interim periods
within those fiscal years. The Company does not expect the adoption of SFAS No.
144 to have a significant impact on its financial condition or results of
operations.

(3)      ACCOUNTING FOR INCOME TAXES

         The Company records deferred tax liabilities utilizing an asset and
liability approach. This method gives consideration to the future tax
consequences associated with differences between the financial accounting and
tax basis of assets and liabilities. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.

         The Company and its domestic subsidiaries file a consolidated federal
income tax return. The Company's foreign subsidiaries file tax returns in the
country where they are domiciled. The Company records current income taxes based
on its estimated tax liability in the United States and foreign countries for
the period.


                                      -8-
<PAGE>
                        GREY WOLF, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

(4)      LONG-TERM DEBT

         The Company has a senior secured revolving credit facility with several
lenders led by the CIT Group/Business Credit, Inc. (the "CIT Facility") which
provides the Company the ability to borrow up to the lesser of $50.0 million or
50% of the orderly liquidation value (as defined in the agreement) of certain
drilling rig equipment located in the 48 contiguous United States. The CIT
Facility is a four year revolving facility expiring January 14, 2003, with
automatic annual renewals thereafter unless terminated by the lender on any
subsequent anniversary date and then only upon 60 days prior notice. Periodic
interest payments are due at a floating rate based upon the Company's debt
service coverage ratio within a range of either LIBOR plus 1.75% to 3.50% or
prime plus 0.25% to 1.50%. The CIT Facility provides up to $10.0 million
available for letters of credit. The Company is required to pay a commitment fee
of 0.375% per annum on the unused portion of the CIT Facility and the letters of
credit accrue a fee of 1.25% per annum. In addition, the CIT Facility contains
certain affirmative and negative covenants including a minimum appraisal value
of the drilling rigs and related equipment plus certain financial covenants.
Substantially all of the Company's assets, including its drilling equipment, are
pledged as collateral under the CIT Facility. The CIT Facility is also secured
by our guarantees and certain of our wholly owned subsidiaries guarantees. The
Company, however, retains the option, subject to a minimum appraisal value,
under the CIT Facility to extract $75.0 million of the equipment out of the
collateral pool for other purposes. The Company currently has no borrowings
outstanding under the CIT Facility and $5.7 million outstanding under letters of
credit at September 30, 2001.

         The Company has $250.0 million in principal amount of senior notes
("Notes") outstanding at September 30, 2001. The Notes, issued in June 1997 and
May 1998, bear interest at 87/8% per annum and mature July 1, 2007. The Notes
are general unsecured senior obligations of the Company and are fully and
unconditionally guaranteed, on a joint and several basis, by all domestic
wholly-owned subsidiaries of the Company. Non-guarantor subsidiaries are
immaterial. All fees and expenses incurred at the time of issuance are being
amortized over the life of the Notes.

         The Notes are not redeemable at the option of the Company prior to July
1, 2002. On or after such date, the Company will have the option to redeem the
Notes in whole or in part during the twelve month periods beginning July 1, 2002
at 104.4375%, beginning July 1, 2003 at 102.9580%, beginning July 1, 2004 at
101.4792% and beginning July 1, 2005 and thereafter at 100.0000% together with
any interest accrued and unpaid to the redemption date. Upon a change of control
as defined in the indentures, each holder of the Notes will have the right to
require the Company to repurchase all or any part of such holder's Notes at a
purchase price equal to 101% of the aggregate principal amount thereof, plus
accrued and unpaid interest to the date of purchase.

(5)      SEGMENT INFORMATION AND ACCUMULATED COMPREHENSIVE INCOME

         The Company manages its business as one reportable segment. Although
the Company provides contract drilling services in several markets domestically,
these operations have been aggregated into one reportable segment based on the
similarity of economic characteristics among all markets including the nature of
the services provided and the type of customers of such services.

         Prior to the third quarter of 2001, the Company managed its business as
two reportable segments; domestic operations and foreign operations. Late in the
first quarter of 1999, we suspended all operations




                                      -9-
<PAGE>

                        GREY WOLF, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


in Venezuela but retained the option to begin operations at any time. However,
during the second quarter of 2001, the Company moved its five Venezuela rigs to
the United States and in the third quarter of 2001 sold three of the five rigs
for $1.3 million. This sale resulted in a gain of approximately $602,000. As a
result of moving its Venezuela rigs to the United States, the Company realized
$454,000 of previously unrealized foreign currency translation losses during the
second quarter of 2001.

(6)      COMMITMENTS AND CONTINGENT LIABILITIES

         The Company is involved in litigation incidental to the conduct of its
business, none of which management believes is, individually or in the
aggregate, material to the Company's consolidated financial condition or results
of operations.

         Substantially all of the Company's contract drilling activities are
conducted with independent and major oil and gas companies in the United States.
Historically, the Company has not required collateral or other security to
support the related receivables from such customers. However, the Company has
required certain customers to deposit funds in escrow prior to the commencement
of drilling. Actions typically taken by the Company in the event of nonpayment
include filing a lien on the customer's producing property and filing suit
against the customer.







                                      -10-
<PAGE>
                        GREY WOLF, INC. AND SUBSIDIARIES

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

         The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto of Grey Wolf, Inc. included
elsewhere herein and in our audited consolidated financial statements and notes
thereto included in our Annual Report on Form 10-K for the year ended December
31, 2000.

GENERAL

         We are a leading provider of contract land drilling services in the
United States with a fleet of 121 rigs, of which 87 rigs are currently marketed.
We recently cold-stacked, or added 12 rigs to inventory, bringing our inventory
rig count to 34. Included in the marketed fleet is one non-owned rig that we
operate for a third party.

Rig Activity

         Since the end of the second quarter of 1999 we, as well as the domestic
land drilling industry, have enjoyed sequential quarter over quarter improvement
in operating and financial results. However, we have seen a definite decline in
customer demand and in the number of rigs running beginning late in the third
quarter of 2001 and we expect this to continue in the fourth quarter. At
November 8, 2001, we had 72 rigs working. The table below shows the average
number of our rigs working in our operating markets during the periods
indicated:

<Table>
<Caption>

     1999                           2000                                               2001
     ----       ----------------------------------------------         -----------------------------------
     Full                                                 Full
     Year       Q-1       Q-2        Q-3       Q-4        Year         Q-1       Q-2        Q-3       Oct.
     ----       ---       ---        ---       ---        ----         ---       ---        ---       ----
<S>             <C>       <C>        <C>       <C>        <C>          <C>       <C>        <C>       <C>
      45        61        65         77        83          71           88        92         91        78
</Table>


Drilling Contract Bid Rates

         Dayrates are driven by utilization and with the declining number of
rigs running, we have also seen a drop in dayrates. Our current daywork bid
rates are between $9,000 and $11,500 per day without fuel or top drives. This is
a decline from the leading edge bid rates of $12,000 to $17,000 per day in July
2001. It is important to note that the highest bid rate achieved in the
1997-1998 up cycle was approximately $10,000 per day without fuel or top drives.
We currently own 12 top drives for which our current bid rates are $1,500 per
day. Bid rates for our top drives are in addition to the above stated bid rates
for our rigs.

Term Contracts

         An integral part of our strategy in 2001 has been to seek out long term
contracts with our customers to help ensure an income stream in the event of
lower commodity prices, to recover capital costs of refurbishment plus an
acceptable return, and to be able to give our customers a dedicated rig for
their drilling programs at a competitive rate. All 10 of the rigs committed to
service in 2001 have been reactivated under term contracts. These term contracts
have original terms ranging in length from one to two years and contain
termination provisions which require our customers, upon cancellation of a
contract, to pay an amount that approximates our operating margin for the
remaining days under the contract.




                                      -11-
<PAGE>

         Twenty-two rigs are currently working under term contracts. Based on
contracts currently in place, we also expect to enter 2002 with 22 rigs working
under term contracts. We have approximately 6,150 days contracted under term
contracts in 2002 and approximately 1,500 days in 2003 with average daily
margins of approximately $7,000.

         As discussed previously, we have seen a weakening in demand and believe
that our current term contracts will mitigate a portion of the financial risk
associated with this lower demand.

Turnkey and Footage Contract Activity

         Revenue generated from turnkey and footage contracts was approximately
15% of total revenue in the third quarter of 2001, compared with 11% during the
second quarter of 2001 and 33% during the third quarter of 2000. The percentage
of days worked on turnkey and footage contracts was 7% of total days worked in
the second and third quarters of 2001 compared to 21% in the third quarter of
2000. We expect that turnkey and footage contracts will continue to represent
approximately 7% to 10% of the total days worked in 2001. Turnkey and footage
contracts generated earnings before interest, income taxes, depreciation and
amortization ("EBITDA") of $5.4 million in the third quarter of 2001 compared to
$4.5 million in the second quarter of 2001 and $2.3 million in the third quarter
of 2000. For the third quarter of 2001, our turnkey operating margin was $9,141
per day, which was 34% greater than the $6,800 daywork margin per day.

         The revenue and EBITDA generated on turnkey and footage contracts
varies widely based upon a number of factors, including the location of the
contracted work as well as the depth and level of complexity of the wells
drilled. The demand for drilling services under turnkey and footage contracts
is, however, greater during periods of overall lower demand. There can be no
assurance that we will be able to maintain the current level of revenue or
EBITDA derived from turnkey and footage contracts.

New Markets

         We began operations in the Rocky Mountain market in June 2001 under a
two-year term contract for our ultra-deep drilling Rig 558. Early in the fourth
quarter we deployed a second rig into the market. This second term contract is
for a one-year commitment for a 3,000 horsepower rig in Southwestern Wyoming and
broadens the operating base that was established with the deployment of Rig 558.

         In May 2001, we signed a two-year term contract for a 3,000 horsepower
rig to drill in West Texas. This rig is being upgraded from inventory and is
expected to go to work late in the fourth quarter of 2001. We also recently
moved a rig to West Texas which is currently working for a large independent oil
and gas company on a well to well contract basis. This market presents an
excellent opportunity for the utilization of our premium deep-drilling equipment
because there is a shortage of quality equipment that can drill to depths of
greater than 20,000 feet in that area.

         The presence of these rigs provide us with established operating bases
in these two markets which is anticipated to provide further expansion
opportunities.






                                      -12-
<PAGE>

Venezuelan Operations

         During the second quarter of 2001, we moved our five Venezuela rigs to
the United States, and in the third quarter of 2001 sold three of the five rigs
for $1.3 million. We currently have no operations or operating assets in the
Venezuela market.

Financial Results

         Our operating margin for the quarter ended September 30, 2001 was
$6,971 per day, up $612 per day, or 10% from the second quarter 2001 operating
margin of $6,359 per day. The third quarter 2001 operating margin also increased
by $5,026 per day, or 258% when compared to the third quarter 2000 operating
margin of $1,945 per day.

         Net income for the third quarter of 2001 was $25.4 million compared to
net income of $20.7 million for the second quarter of 2001 and a net loss of
$2.3 million for the third quarter of 2000. Revenues for the third quarter of
2001, second quarter of 2001, and third quarter of 2000 were $125.1 million,
$112.4 million, and $73.4 million, respectively. EBITDA for the third quarter of
2001, second quarter of 2001 and third quarter of 2000 was $55.9 million, $50.7
million, and $11.6 million, respectively.

Financial Outlook and Strategy

         Based on currently anticipated levels of activity and dayrates, we
expect to generate an operating margin of approximately $5,100 per day for the
fourth quarter of 2001. This operating margin level should generate EBITDA of
approximately $32.0 million for the quarter and the resultant net income per
share is expected to be approximately $.05 on a diluted basis, assuming an
effective tax rate between 37% and 39%. We expect depreciation expense of
approximately $10.6 million in the fourth quarter of 2001. Capital expenditures
for the fourth quarter of 2001 are projected to be approximately $27.0 million,
including approximately $18.2 million for the upgrade and reactivation of
drilling rigs from inventory committed to work under term contracts.

         Our capital expenditures during 2002 will largely be based upon our
level of drilling activity and number of rigs working. It is our strategy to
control capital expenditures while maintaining our equipment. We will continue
to reduce costs quickly on rigs added to inventory, but intend to retain our
experienced toolpushers and drillers as we did in the last down cycle. The
recent up cycle proved there was a tremendous need for experienced personnel and
our decision to retain them during the last downturn provided a long-term
advantage.

         We believe that higher dayrates across our fleet of rigs are more
beneficial than maintaining higher utilization by discounting prices. We also
believe that customers prefer to make the decision of which contractor to use
based upon safety, quality of service, and value added as opposed to price
considerations alone. Our strategy remains unchanged and that is to provide the
greatest value for our customers in order to obtain the highest rates for our
rigs throughout the cyclical flows of our industry.





                                      -13-
<PAGE>




FINANCIAL CONDITION AND LIQUIDITY

         The following table summarizes our financial position as of September
30, 2001 and December 31, 2000.


<Table>
<Caption>

                                         SEPTEMBER 30, 2001                 DECEMBER 31, 2000
                                 ------------------------------      ------------------------------
                                           (UNAUDITED)
                                                           (IN THOUSANDS)

                                    Amount              %               Amount              %
                                 ------------      ------------      ------------      ------------

<S>                              <C>               <C>               <C>               <C>
Working capital                  $    122,904                22      $     60,029                13
Property and equipment, net           426,018                77           386,861                85
Other noncurrent assets                 5,763                 1             6,658                 2
                                 ------------      ------------      ------------      ------------
         Total                   $    554,685               100      $    453,548               100
                                 ============      ============      ============      ============

Long-term debt                   $    250,650                45      $    249,851                55
Other long-term liabilities            67,788                12            30,281                 7
Shareholders' equity                  236,247                43           173,416                38
                                 ------------      ------------      ------------      ------------
         Total                   $    554,685               100      $    453,548               100
                                 ============      ============      ============      ============
</Table>

         The significant changes in our financial position from December 31,
2000 to September 30, 2001 are the increases in working capital of $62.9
million, net property and equipment of $39.2 million, other long-term
liabilities of $37.5 million, and shareholders' equity of $62.8 million. The
increase in working capital is primarily due to a $44.4 million increase in
accounts receivable and $25.8 million increase in cash partially offset by a
$9.3 million increase in accounts payable, all of which are due to increases in
dayrates and drilling activity. The increase in net property and equipment is
primarily due to $71.0 million of capital expenditures, $35.3 million of which
related to rig upgrades and reactivation offset by $30.4 million in depreciation
expense. Other long-term liabilities increased primarily as the result of a
higher deferred income tax liability of $34.1 million due to higher earnings in
the first nine months of 2001. Shareholders' equity increased primarily due to
net income of $59.5 million and stock option exercises which generated proceeds
and tax benefits to us which totaled $2.9 million.

         The Company has a senior secured revolving credit facility with several
lenders led by the CIT Group/Business Credit, Inc. (the "CIT Facility") which
provides the Company the ability to borrow up to the lesser of $50.0 million or
50% of the orderly liquidation value (as defined in the agreement) of certain
drilling rig equipment located in the 48 contiguous United States. The CIT
Facility is a four year revolving facility expiring January 14, 2003, with
automatic annual renewals thereafter unless terminated by the lender on any
subsequent anniversary date and then only upon 60 days prior notice. Periodic
interest payments are due at a floating rate based upon the Company's debt
service coverage ratio within a range of either LIBOR plus 1.75% to 3.50% or
prime plus .25% to 1.50%. The CIT Facility provides up to $10.0 million
available for letters of credit. The Company is required to pay a commitment fee
of 0.375% per annum on the unused portion of the CIT Facility and the letters of
credit accrue a fee of 1.25% per annum. In addition, the CIT Facility contains
certain affirmative and negative covenants including a minimum appraisal value
of the drilling rigs and related equipment plus certain financial covenants.
Substantially all of the Company's assets, including its drilling equipment, are
pledged as collateral under the CIT Facility. The CIT Facility is also secured
by our guarantees and certain of our wholly owned subsidiaries guarantees. The
Company, however, retains the option, subject to a minimum appraisal value,
under the CIT Facility to extract $75.0 million of the equipment out of the
collateral pool for other purposes. The Company currently has no borrowings
outstanding under the CIT Facility and $5.7 million outstanding under letters of
credit at September 30, 2001.




                                      -14-
<PAGE>

         Among the various covenants that must be satisfied by us under the CIT
Facility are the following two covenants which shall apply whenever our
liquidity, defined as the sum of cash, cash equivalents and availability under
the CIT Facility, falls below $25,000,000: (i) 1 to 1 EBITDA coverage of debt
service, tested monthly on a trailing 12 month basis and (ii) minimum tangible
net worth (as defined in the CIT Facility) at the end of each quarter will be
the prior year tangible net worth less $30,000,000 adjusted for quarterly tests.
Additionally, it will be a default if the orderly liquidation value of the
domestic drilling equipment (including inventoried rigs) falls below
$150,000,000. Also, if the two month average rig utilization falls below 45%,
the lender will have the option to request one additional appraisal per year to
aid in determining the current orderly liquidation value of the drilling
equipment. At September 30, 2001, we were in compliance with these covenants.

         We owe a total of $250.0 million in principal amount under our senior
notes. While the principal is not due until 2007, semi-annual interest payments
of approximately $11.1 million are due on January 1 and July 1 of each year. For
the nine months ended September 30, 2001, our operating activities and financing
activities provided cash, while our investing activities consumed cash. Although
we anticipate generating sufficient cash flow, to the extent we are unable to
generate cash flow sufficient to pay debt service and meet our other cash needs,
including capital expenditures, we would be required to use our cash on hand. At
November 8, 2001, our cash balance was $92.3 million.

         The net cash provided by or used in our operating, investing and
financing activities is summarized below:


<Table>
<Caption>

                                         NINE MONTH PERIOD ENDED
                                               SEPTEMBER 30,
                                     -------------------------------
                                         2001               2000
                                     ------------       ------------
                                             (In thousands)
                                              (Unaudited)
<S>                                  <C>                <C>
Net cash provided by (used in):
     Operating activities            $     92,637       $     (3,182)
     Investing activities                 (69,281)           (19,127)
     Financing activities                   2,473             54,191
                                     ------------       ------------
Net increase in cash                 $     25,829       $     31,882
                                     ============       ============
</Table>

         Our cash flows from operating activities are affected by a number of
factors including the number of rigs under contract, whether the contracts are
daywork, footage, or turnkey, and the rate received for these services. Our cash
flow generated from operating activities during the first nine months of 2001
and 2000 was $125.4 million (before changes in operating assets and liabilities)
and $9.3 million (before changes in operating assets and liabilities),
respectively. This change is principally due to a 34% increase in operating days
and a 265% increase in per day operating margins between the two periods. Our
cash flows from operating activities were also impacted by changes in operating
assets and liabilities which used $32.8 million and $12.4 million in cash flow
for the nine months ended September 30, 2001 and 2000, respectively.

         Cash flow used in investing activities for the nine months ended
September 30, 2001 primarily consisted of $71.0 million of capital expenditures
for reactivating rigs, rig maintenance, top drives and other equipment
purchases. Cash flow used in investing activities for the nine month period
ended September 30, 2000 primarily consisted of $19.2 million of capital
expenditures for reactivating rigs, rig maintenance and top drives.

         Cash flow provided by financing activities for the nine months ended
September 30, 2001 consisted principally of proceeds of $1.6 million from stock
option exercises and net proceeds of $830,000 from long-term lease obligations.
Cash flow provided by financing activities for the nine months ended September
30, 2000 primarily consisted of net proceeds of $51.6 million and $3.1 million
from the sale of common stock and from stock option exercises, respectively.



                                      -15-
<PAGE>
         Capital expenditures for the nine months ended September 30, 2001 were
$71.0 million. Capital expenditures for the year ending December 31, 2001 are
estimated to be $100 million, including approximately $53.5 million for the
upgrade and reactivation of drilling rigs from inventory. The rigs that are
being reactivated are committed under term contracts with our customers and are
also being upgraded to incorporate the latest technology with all or some of the
following: new solids control systems, larger mud pumps for better hydraulics,
disc brakes and digital drilling systems. As discussed previously, we expect our
term contracts to provide a return of the incremental capital investment over
the term of the contracts.

Inflation and Changing Prices

         Contract drilling revenues do not necessarily track the changes in
general inflation as they tend to respond to the level of activity on the part
of the oil and gas industry in combination with the supply of equipment and the
number of competing companies. Capital and operating costs are influenced to a
larger extent by specific price changes in the oil and gas industry and to a
lesser extent by changes in general inflation.

Other

         We have not paid any cash dividends on our common stock and do not
anticipate paying dividends on the common stock at any time in the foreseeable
future. Furthermore, the CIT Facility prohibits the payment of cash dividends
without the consent of the participating lenders.

RESULTS OF OPERATIONS

Comparison of the Three Months Ended September 30, 2001 and 2000

         The following tables highlight rig days worked, contract drilling
revenue and drilling operating expenses for our daywork and turnkey operations
for the three months ended September 30, 2001 and 2000.


<Table>
<Caption>

                                                THREE MONTHS ENDED                               THREE MONTHS ENDED
                                                SEPTEMBER 30, 2001                               SEPTEMBER  30, 2000
                                  ------------------------------------------------      -------------------------------------------
                                    DAYWORK           TURNKEY                             DAYWORK        TURNKEY
                                   OPERATIONS       OPERATIONS(2)        TOTAL           OPERATIONS    OPERATIONS(2)       TOTAL
                                  ------------      -------------     ------------      ------------   -------------    -----------
                                                       (In thousands, except rig days worked and averages per day)
                                                                                (Unaudited)
<S>                               <C>               <C>               <C>               <C>            <C>              <C>
Rig days worked                          7,775               614             8,389             5,574           1,467          7,041

Contract drilling revenue         $    106,105      $     19,014      $    125,119      $     49,234    $     24,139    $    73,373
Drilling operating expenses(1)          53,232            13,406            66,638            37,802          21,878         59,680
                                  ------------      ------------      ------------      ------------    ------------    -----------
Gross profit (loss)               $     52,873      $      5,608      $     58,481      $     11,432    $      2,261    $    13,693
                                  ============      ============      ============      ============    ============    ===========

Average per rig day worked
   Contract drilling revenue      $     13,647      $     30,993      $     14,915      $      8,833    $     16,455    $    10,421
   Drilling operating expenses           6,847            21,852             7,944             6,782          14,914          8,476
                                  ------------      ------------      ------------      ------------    ------------    -----------
   Gross profit                   $      6,800      $      9,141      $      6,971      $      2,051    $      1,541    $     1,945
                                  ============      ============      ============      ============    ============    ===========
</Table>

----------
(1) Excludes depreciation and amortization, general and administrative expenses,
    and provision for doubtful accounts.
(2) Turnkey operations include the results from turnkey and footage contracts.




                                      -16-
<PAGE>


         Total contract drilling revenue increased approximately $51.7 million,
or 71%, to $125.1 million for the three months ended September 30, 2001, from
$73.4 million for the three months ended September 30, 2000. This increase is
the result of an increase in total rig days worked of 1,348, or 19%, and an
increase in the total average revenue per day of $4,494, or 43%. The increase in
the total rig days worked consists of 2,201 more rig days under daywork
contracts offset by 853 fewer rig days under turnkey contracts. The increase in
the total average revenue per day is primarily due to higher dayrates received
from both daywork and turnkey operations.

         Total drilling operating expenses increased by approximately $7.0
million, or 12%, to $66.6 million for the three months ended September 30, 2001,
as compared to $59.7 million for the three months ended September 30, 2000. The
increase is primarily a result of the increased level of activity from daywork
operations partially offset by the decreased level of activity from turnkey
operations as discussed above. Total drilling operating expenses on a per day
basis declined, however, due primarily to a decreased level of turnkey activity
and overhead items being spread over more days worked partially offset by wage
increases of 15% and 12% which were effective August 31, 2000 and June 1, 2001,
respectively.

         Successfully completed turnkey and footage contracts generally result
in higher effective revenues per day worked than under daywork contracts. Gross
profit margins per day worked on successful turnkey and footage jobs are also
generally greater than under daywork contracts, although we are typically
required to bear additional operating costs (such as drilling mud costs) that
would typically be paid by the customer under daywork contracts. Revenues,
operating expenses and gross profit (or loss) margins on turnkey and footage
contracts are affected by a number of variables, and include the depth of the
well, geological complexities and the actual operational experience encountered
in completing the well.

         Depreciation and amortization expense increased by $1.1 million, or
12%, to $10.3 million for the three months ended September 30, 2001, compared to
$9.2 million for the three months ended September 30, 2000. The increase is
primarily due to increased depreciation attributable to equipment purchased
during the first nine months of 2001.

         General and administrative expenses increased by $493,000, or 24%, to
$2.6 million for the three months ended September 30, 2001, from $2.1 million
for the same period of 2000 due primarily to the increased level of our
operating activity and accrual of performance based compensation.

         Interest income decreased by $365,000, or 39% to $570,000 for the three
months ended September 30, 2001 from $935,000 for the same period of 2000 due
primarily to a decrease in interest rates.

         The difference in interest expense for the three month periods ended
September 30, 2001 and 2000 is negligible as the average outstanding debt
balance was virtually the same and the largest component of our debt structure
is our senior notes which carry interest at a fixed rate.





                                      -17-
<PAGE>
Comparison of the Nine Months Ended September 30, 2001 and 2000

          The following tables highlight rig days worked, contract drilling
revenue and drilling operating expenses for our daywork and turnkey operations
for the nine months ended September 30, 2001 and 2000.


<Table>
<Caption>

                                              NINE MONTHS ENDED                               NINE MONTHS ENDED
                                              SEPTEMBER 30, 2001                              SEPTEMBER 30, 2000
                                ----------------------------------------------    ----------------------------------------------
                                   DAYWORK          TURNKEY                          DAYWORK          TURNKEY
                                 OPERATIONS       OPERATIONS(2)      TOTAL         OPERATIONS       OPERATIONS(2)        TOTAL
                                -------------    ---------------  ------------    -------------    ---------------    ------------
                                                   (In thousands, except rig days worked and averages per day)
                                                                           (Unaudited)

<S>                             <C>              <C>              <C>             <C>              <C>              <C>
Rig days worked                        22,853            1,832          24,685           14,683            3,759          18,442

Contract drilling revenue       $     288,213    $      46,961    $    335,174    $     119,596    $      67,423    $    187,019
Drilling operating expenses(1)        151,407           32,654         184,061           97,230           58,833         156,063
                                -------------    -------------    ------------    -------------    -------------    ------------
Gross profit (loss)             $     136,806    $      14,307    $    151,113    $      22,366    $       8,590    $     30,956
                                =============    =============    ============    =============    =============    ============

Average per rig day worked
 Contract drilling revenue      $      12,612    $      25,641    $     13,578    $       8,145    $      17,936    $     10,141
 Drilling operating expenses            6,626           17,829           7,456            6,622           15,651           8,462
                                -------------    -------------    ------------    -------------    -------------    ------------
   Gross profit (loss)          $       5,986    $       7,812    $      6,122    $       1,523    $       2,285    $      1,679
                                =============    =============    ============    =============    =============    ============
</Table>

----------
(1) Excludes depreciation and amortization, general and administrative expenses,
    provision for doubtful accounts and unusual charges.
(2) Turnkey operations include the results from turnkey and footage contracts.

         Total contract drilling revenue increased approximately $148.2 million,
or 79% to $335.2 million for the nine months ended September 30, 2001, from
$187.0 million for the nine months ended September 30, 2000. This increase is
the result of an increase in total rig days worked of 6,243 or 34%, and an
increase in the total average revenue per day of $3,437, or 34%. The increase in
the total rig days worked consists of 8,170 more rig days under daywork
contracts offset by 1,927 fewer rig days under turnkey contracts. The increase
in the total average revenue per day is primarily due to higher dayrates
received from both daywork and turnkey operations.

         Total drilling operating expenses increased by approximately $28.0
million, or 18% to $184.1 million for the nine months ended September 30, 2001,
as compared to $156.1 million for the nine months ended September 30, 2000. The
increase is primarily a result of the increased level of activity from daywork
operations partially offset by the decreased level of activity from turnkey
operations as discussed above. Total drilling operating expenses on a per day
basis declined, however, due primarily to a decreased level of turnkey activity
and overhead items being spread over more days worked partially offset by a wage
increase of 12% which was effective June 1, 2001.

         Successfully completed turnkey and footage contracts generally result
in higher effective revenues per day worked than under daywork contracts. Gross
profit margins per day worked on successful turnkey and footage jobs are also
generally greater than under daywork contracts, although we are typically
required to bear additional operating costs (such as drilling mud costs) that
would typically be paid by the customer under daywork contracts. Revenues,
operating expenses and gross profit (or loss) margins on turnkey and footage
contracts are affected by a number of variables, and include the depth of the
well, geological complexities and the actual operational experience encountered
in completing the well.

         Depreciation and amortization expense increased by $3.3 million, or 12%
to $30.4 million for the nine months ended September 30, 2001 compared to $27.1
million for the nine months ended September 30, 2000. The increase is primarily
due to increased depreciation attributable to equipment purchased during the
first nine months of 2001.



                                      -18-
<PAGE>

         General and administrative expense increased by $1.4 million or 24%, to
$7.2 million for the nine months ended September 30, 2001 from $5.8 million for
the same period of 2000 due primarily to the increased level of operating
activity and accrual of performance based compensation.

         Interest income decreased by $267,000, or 13% to $1.8 million for the
nine months ended September 30, 2001, from $2.1 million for the same period of
2000 due primarily to lower interest rates in 2001 partially offset by higher
cash balances during the nine months ended September 30, 2001. Cash balances
were higher as a result of the issuance of 13.0 million shares of common stock
on April 4, 2000, and due to higher drilling activity and dayrates.

         The difference in interest expense for the nine month periods ended
September 30, 2001 and 2000 is negligible as the average outstanding debt was
virtually the same and the largest component of our debt structure is our senior
notes which carry interest at a fixed rate.

         Net other expenses increased by $420,000 to $448,000 for the nine
months ended September 30, 2001, from $28,000 for the same period of 2000 due
primarily to the $454,000 realization of previously unrealized foreign currency
translation losses as a result of moving our Venezuela rigs to the United
States. We no longer have operations or operating assets in the Venezuela
market.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

          Interest Rate Risk. We are subject to market risk exposure related to
changes in interest rates on the CIT Facility. Interest on borrowings under the
CIT Facility accrues at a variable rate, using either the prime rate plus 0.25%
to 1.50% or LIBOR plus 1.75% to 3.50%, depending upon our debt service coverage
ratio for the trailing 12 month period. On November 8, 2001, we had no
outstanding balance under the CIT Facility and as such have no exposure at this
time to a change in interest rates.





                                      -19-
<PAGE>




PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         We are involved in litigation incidental to the conduct of our
business, none of which management believes is, individually or in aggregate,
material to our consolidated financial condition or results of operations. See
Note 6 - Commitments and Contingent Liabilities.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

         None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

         None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.

ITEM 5. OTHER INFORMATION

         This Quarterly Report on Form 10-Q contains "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All
statements other than statements of historical facts included in this report
including, without limitation, statements regarding our business strategy,
plans, objectives, capital expenditures and beliefs of management for future
operations and results, are forward-looking statements. Although we believe the
expectations and beliefs reflected in such forward-looking statements are
reasonable, we can give no assurance that such expectations will prove to be
correct. Important factors that could cause actual results to differ materially
from our expectations include:

o        fluctuations in prices and demand for oil and natural gas;

o        fluctuations in levels of oil and gas exploration and development
         activities;

o        fluctuations in the demand for contract land drilling services;

o        the existence and competitive responses of our competitors;

o        technological changes and developments in the industry;

o        the existence of operating risks inherent in the contract land drilling
         industry;

o        U.S. and global economic conditions;

o        the availability and terms of insurance coverage;

o        the ability to attract and retain qualified personnel.

o        unforeseen operating costs such as costs for environmental remediation
         and turnkey cost overruns.

         Our forward-looking statements speak only as of the date specified in
such statements or, if no date is stated, as of the date of this report. Grey
Wolf, Inc. expressly disclaims any obligation or undertaking to release publicly
any updates or revisions to any forward-looking statement contained in this
report to reflect any change in our expectations or with regard to any change in
events, conditions or circumstances on which our forward-looking statements are
based. Please refer to our Annual Report on Form 10-K for the year ended
December 31, 2000 for additional information concerning risk factors that could
cause actual results to differ from the forward looking statements.

Item 6. Exhibits and Reports on Form 8-K

         None.



                                      -20-
<PAGE>

                                   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.


                                               GREY WOLF, INC.



Date: November 13, 2001               By:    /s/ David W. Wehlmann
                                             ----------------------------------
                                             David W. Wehlmann
                                             Senior Vice President and Chief
                                             Financial Officer



Date: November 13, 2001               By:    /s/ Merrie S. Costley
                                             ----------------------------------
                                             Merrie S. Costley
                                             Vice President and Controller



                                      -21-