Kentucky USA Expands New Albany Shale Prospect

Kentucky USA Energy has entered into a farm-out agreement with Thomasson Petroleum Enterprises, Inc. ("TPE") to acquire from TPE certain drilling rights on farm-out acreage that has been selected in Todd, Muhlenberg and Christian counties in western Kentucky. This additional farm-out acreage is adjacent to the Company's existing leasehold property associated with the New Albany Shale.

Under the terms of the agreement with TPE, the Company acquired the right to drill up to 40 wells on the subject leases to explore for oil and gas in and above the New Albany Shale. The Company must drill ten (10) wells in the each year of the agreement to be eligible to drill an additional ten wells in the following year, up to a maximum of 40 wells over four years. TPE, the leasehold owner, will retain a 25% net revenue interest in the wells that the Company drills on the TPE acreage into the Albany shale and an 18.75% net revenue interest in any oil wells drilled above the top of the Albany shale.

"This farm-out agreement gives us the ability to further develop into areas that we believe have strong gas potential and we expect to begin a drilling program on this acreage shortly," said Steven Eversole, CEO of Kentucky USA Energy.


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