KFG Resources President, Robert A. Kadane, announced that the Company's subsidiary, KFG Petroleum Corporation, Natchez, Mississippi, has staked three locations in the Fayette Field, Jefferson County, Mississippi, and is in the process of permitting three shallow Wilcox tests (4,000 feet to 5,500 feet) based on results of the 3-D seismic survey conducted in 2008. "It is the Company's intention to develop the field's shallow oil and gas reserves as Phase I of the redevelopment of the Fayette Field." At this writing, a deep well (a 9,800-foot Lower Tuscaloosa test) is planned for the last quarter of 2009.
KFG has assembled a block of approximately 4,100 acres. The Company has farmed out all working interests in the field area in all undeveloped acreage and owns a 79.1666% net revenue interest until all cost of seismic, land, and drilling have been recovered. At that point, KFG's working interest will revert to a 74.9% and its net revenue interest will be 59.3%. The timing of the conversion will be based on the success of the drilling efforts.
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