Robert A. Kadane, President of KFG Resources Ltd., reported today that the Company's wholly owned subsidiary, KFG Petroleum Corporation, has negotiated an 11,000 acre oil and gas lease in north Catahoula Parish, Louisiana, from Louisiana Central Lumber Company. The Company is required to drill three shallow wells (3,500 feet to 4,500 feet) to be spudded on or before January 10, 2000, June 10, 2000, and December 31, 2000, to earn a five year paid up lease to the base of the Wilcox formation, 5,500 feet, on this acreage. The Company's subsidiary, Shamrock Drilling Co., is under contract to drill the first well, the KFG/Louisiana Central, to be spudded the week of January 3, 2000. The Company will have an 84.375% working interest (67.5% net revenue interest) in this well and surrounding 4,300 acres. This property is in an area of known shallow gas reserves and Wilcox and Tuscaloosa oil production. No wells have been completed in the shallow gas sands until recently as there have been no pipelines in the area to market gas production, but with the completion of two major gas transmission lines through north Catahoula Parish in the early 1990's, it is now feasible to explore for and produce shallow gas reserves. The Company intends to seek industry partners for the additional required drilling on this acreage and also to conduct a 3D seismic survey to delineate the subsurface geology to develop prospects for additional drilling. The Company intends to act as operator of these projects.

The Company's common shares are listed on the Canadian Venture Exchange, trading symbol "KFG". For additional information, please contact Mr. Robert A. Kadane, President, at (303) 825- 7080.

The Canadian Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release."