KFG Completes Spring Hill Oil Producer

KFG Resources reported that Spring Hill No. 5 well in Fayette County, Mississippi, has been completed as a producing oil well. The No. 5 well, which was drilled and will be operated by the Company's subsidiary, KFG Petroleum Corporation, was completed in the '4,600 Foot Sand' formation at a depth of 3,925 feet.

Mr. Robert A. Kadane, President of the Company, stated, "Number 5 is producing pipeline oil at a rate of 20 bopd, together with 150,000 cubic feet of gas per day. Since the gas pipeline is down for repairs until July or August 2010 the gas is being used as fuel for the pumping units on the No. 1, No. 2 and No. 5 Spring Hill wells and the excess at present is being flared."

Aggregate production from KFG's Spring Hill well No.'s 1, 2 and 5 is approximately 90 bopd. The Company owns 100% of the working interest (79.16% net interest) in the Spring Hill wells, reverting after payout of about US$2.6 million of drilling, seismic, land, exploration, development, taxes and operating expenses, to a 74.9% working interest (59.4% net interest).

Current development plans involve conducting work-over operations on additional '4,600 Foot Sand' wells in the Fayette field that were previously drilled but are now off production and, coming up this summer, another shallow Wilcox offset well at Spring Hill will be drilled.

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