THIS FOURTH AMENDMENT TO LOAN AGREEMENT (this "Amendment") is executed on

March 25, 2004, to be effective as of March 31, 2004, by and among THE CIT

GROUP/BUSINESS CREDIT, INC., a New York corporation ("CITBC"), in its individual

capacity as a Lender and as Agent for the Lenders hereinafter named (the

"AGENT"), WELLS FARGO FOOTHILL, INC.,, a California corporation formerly known

as Foothill Capital Corporation, and any other party hereafter becoming a Lender

pursuant to Section 12.4(b) of the Loan Agreement (as hereinafter defined), each

individually sometimes referred to as a "LENDER" and, collectively, the

"LENDERS"), GREY WOLF DRILLING COMPANY L.P., a Texas limited partnership (the

"BORROWER"), GREY WOLF, INC., a Texas corporation (the "PARENT"), GREY WOLF

HOLDINGS COMPANY, a Nevada corporation ("HOLDINGS"), GREY WOLF LLC, a Louisiana

limited liability company ("GWLLC"), DI ENERGY, INC., a Texas corporation

("ENERGY"), GREY WOLF INTERNATIONAL, INC., a Texas corporation

("INTERNATIONAL"), DI/PERFENSA INC., a Texas corporation ("PERFENSA"), MURCO

DRILLING CORPORATION, a Delaware corporation ("MURCO") (Parent, Holdings, GWLLC,

Energy, International, Perfensa and Murco are referred to collectively herein as

the "GUARANTORS").



                                    RECITALS



      1.    WHEREAS, pursuant to the terms and subject to the conditions of that

certain Loan Agreement dated as of January 14, 1999 among the parties hereto, as

amended by that certain First Amendment to Loan Agreement dated as of December

20, 2001, that certain Second Amendment to Loan Agreement dated as of February

7, 2003, and that certain Third Amendment to Loan Agreement dated as of May 1,

2003 (such Loan Agreement, as the same was previously amended, is hereby amended

and may hereafter be amended from time to time, being hereinafter referred to as

the "Loan Agreement"), the Borrower was granted a $50,000,000 revolving line of

credit which included a letter of credit facility;



      2.    WHEREAS, the indebtedness of the Borrower to the Lenders is

currently evidenced by that certain Revolving Note dated December 20, 2001 (the

"Revolving Note"), executed by the Borrower and payable to CITBC as Agent for

the benefit of the Lenders in the stated principal amount of $75,000,000;



      3.    WHEREAS, payment of the Obligations of the Borrower are supported by

the guarantees of the Guarantors contained in Section 13 of the Loan Agreement;



      4.    WHEREAS, to secure, in part, the indebtedness under the Loan

Agreement and the Revolving Note (and all renewals, extensions, modifications

and/or rearrangements thereof and in connection therewith) and all other

indebtedness, liabilities and obligations of the Borrower and the Guarantors to

the Agent for the benefit of the Lenders, then existing or thereafter arising,

the Borrower and the Guarantors have heretofore executed in favor of the Agent

certain Credit Documents (as defined in the Loan Agreement), including, without

limitation, the Security Documents (as defined in the Loan Agreement), which

Credit Documents, as amended in connection herewith, shall continue in full

force and effect upon the



{PAGE}



execution of this Amendment and shall continue to secure the payment by the

Borrower and the Guarantors of the Obligations (as defined in the Loan

Agreement), all as more fully set forth therein and herein;



      5.    WHEREAS, the Borrower has requested that the Agent and the Lenders

modify and, pursuant to the terms and subject to the conditions hereof and in

connection herewith, the Agent and the Lenders have agreed to modify, Section

8.4(h), the definition of Permitted Refinancing, and the related provisions

under the Loan Agreement; and



      6.    WHEREAS, in furtherance of the foregoing and to evidence the

agreements of the parties hereto in relation thereto, the parties hereto desire

to amend the Loan Agreement as hereinafter provided.



      NOW, THEREFORE, in consideration of the premises herein contained and

other good and valuable consideration, the receipt and sufficiency of which are

hereby acknowledged, the Borrower, the Guarantors, the Agent and the Lenders,

intending to be legally bound, agree as follows:



                                    AGREEMENT



                                    ARTICLE I

                                   DEFINITIONS



      1.01  Capitalized terms used in this Amendment are defined in the Loan

Agreement, as amended hereby, unless otherwise stated.



                                   ARTICLE II

                          AMENDMENTS TO LOAN AGREEMENT



      Effective as of the respective date herein indicated, the Loan Agreement

is hereby amended as follows:



      2.01  AMENDMENT AND RESTATEMENT OF DEFINITION OF "PERMITTED REFINANCING".

Effective as of the date of execution of this Amendment, the definition of

"Permitted Refinancing" set forth in Section 10 of the Loan Agreement is amended

and restated to read in its entirety as follows:



            ""Permitted Refinancing" shall mean a refinancing of all or any

      portion of the Indebtedness evidenced by (i) the 3.75% Contingent

      Convertible Senior Notes Due 2023 issued by the Parent in 2003, in the

      aggregate principal amount of $150,000,000, and (ii) the Floating Rate

      Contingent Convertible Senior Notes Due 2024 issued by the Parent in 2004,

      in the aggregate principal amount of up to $125,000,000 (in each case,

      either with the same payees or different financing sources), including a

      restructure or restatement of such existing Indebtedness or a new loan to

      repay such existing Indebtedness, so long as



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      (a) the terms of the refinanced Indebtedness are not materially more

      favorable to the payee(s) and are not less favorable to the Lenders than

      the existing Indebtedness which was refinanced, (b) no Default or Event of

      Default will exist immediately after the completion of such refinancing,

      and (c) such refinancing Indebtedness is unsecured and subordinated in

      right of payment to the Obligations at least to the same extent as the

      Indebtedness being refinanced."



      2.02  AMENDMENT OF SECTION 8.4. Effective as of the date of execution of

this Amendment, Section 8.4(h) of the Loan Agreement is amended and restated to

read in its entirety as follows:



            "(h) Unsecured Indebtedness evidenced by (i) the 3.75% Contingent

      Convertible Senior Notes Due 2023 issued by the Parent in 2003, in the

      aggregate principal amount of $150,000,000, (ii) the Floating Rate

      Contingent Convertible Senior Notes Due 2024 issued by the Parent in 2004,

      in the aggregate principal amount of up to $125,000,000, and (iii) any

      Permitted Refinancing."



                                   ARTICLE III

                              CONDITIONS PRECEDENT



      3.01  CONDITIONS TO EFFECTIVENESS. The effectiveness of this Amendment is

subject to the satisfaction of the following conditions precedent in a manner

satisfactory to Agent, unless specifically waived in writing by Agent:



            (a) Agent shall have received each of the following, each in form

      and substance satisfactory to Agent, in its sole discretion, and, where

      applicable, each duly executed by each party thereto, other than Agent:



                  (i) This Amendment, duly executed by the Borrower and the

            Guarantors; and



                  (ii) All other documents Agent may request with respect to any

            matter relevant to this Amendment or the transactions contemplated

            hereby.



            (b) The representations and warranties contained herein and in the

      Loan Agreement and the other Credit Documents (as defined in the Loan

      Agreement), as each is amended hereby, shall be true and correct as of the

      date hereof, as if made on the date hereof.



            (c) No Default or Event of Default shall have occurred and be

      continuing, unless such Default or Event of Default has been otherwise

      specifically waived in writing by Agent.



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{PAGE}



            (d) All corporate proceedings taken in connection with the

      transactions contemplated by this Amendment and all documents, instruments

      and other legal matters incident thereto shall be satisfactory to Agent.



            (e) Agent's receipt of the fees described in the fee letter dated of

      even date herewith executed by Borrower and Agent.



                                   ARTICLE IV

                  RATIFICATIONS, REPRESENTATIONS AND WARRANTIES

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