Robert A. Kadane, President of KFG Resources Ltd., announced today that KFG's subsidiary, KFG Petroleum Corporation, has set casing to 3,500 feet on the #1 Barton Section 47, T1S-R2E, East Feliciana Parish, Louisiana. A completion attempt will be made in the 3,250 feet Frio Sand. The Sand will be gravel-packed due to its unconsolidated nature. KFG's working interest in this well and surrounding 160 acre drillsite unit is 88.75% (65.56% net). Several thousand feet away, the #2 Barton was completed as a dry hole. KFG's working interest in the remaining Barton acreage (8,383 acres) is 63.75% (47.85% net).

The # 1 Barton will be thoroughly tested at low rates for about 90 days before development starts. As of now, the plans are to drill two wells in the area in February 2001 and two more wells in May 2001 with plans to accelerate development by the fall of 2001.

In another development, KFG Petroleum is planning to re-enter the Lottie K. Gibson #1 well this week, in Section 29, T9N-R6E, Catahoula Parish, Louisiana. KFG has a 90% working interest (72% net) in this well. Twenty-two feet of Wilcox gas pay is behind pipe at 1,163 feet. A pipeline connection is approximately 1,000 feet west of this well. Additional acreage has been acquired east and west of this well for potential development. A gas contract has been signed with the Town of Harrisburg, Louisiana, about three quarters of a mile from the well.

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."