Xun Acquires O&G Leases in Kentucky

Xun Energy has acquired three O&G leases in Kentucky through its wholly owned subsidiary, Nux Holdings of Kentucky, Inc. from Sequachee Oil and Gas LLC. (Sequachee).

XNRG entered into three leasehold assignments with Sequachee whereby Sequachee retains an override royalty equal to 12.5% and each of the landowners will receive a royalty of 12.5% of the value of all oil produced and removed (if any) under the lease. The Company will own 100% of the Working Interest and 75% of the Net Revenue Interest in these leases for oil and gas.

The Tillet lease is approximately 105 acres and is located in Lincoln County, Kentucky. The lease has five shut in oil wells that have been drilled to a depth of 350 to 385 feet. The wells are drilled to the Coniferous producing formation.

The Neeley lease is approximately 239 acres and is located in Jackson County, Kentucky. The lease has one oil well that is currently on pump, but not pumping to generate revenue. The well is drilled to the Coniferous producing formation.

The Gross lease is approximately 30 acres and is located in Clay County, Kentucky. The lease has one gas well that is not connected to a gas pipeline system. The well produced oil from the Stones River formation at a depth of 3,200 feet.

Xun Oil of Kentucky, Inc., a wholly owned subsidiary of the Company, and Nux Holdings of Kentucky, Inc. forms the Oil and Gas Division of the Company (Xun Oil). Xun Oil intends to rework/enhance existing producing and non-producing oil wells by re-entering the well, examine the well logs and the well bore to determine whether or not the well can be stimulated or enhanced to produce/increase production of oil. The Company estimates that a well rework can range from a few thousand dollars to $50,000 which would include drilling the well to deeper formations or drilling a parallel new well.

"We are excited to enter the oil and gas industry with a low cost to the Company," commented Peter Matousek, president of the Company. He further commented, "We believe that in Kentucky we can acquire additional oil and gas leases for a relatively low cost and by re-working the wells, enhance the wells to produce oil and gas. Of course, not all reworks will be success stories. However, we can mitigate the Company's exposure as compared to wild cat drilling programs."