Mr. Robert A. Kadane, President of KFG Resources Ltd., announced today that KFG Petroleum Corporation, a wholly-owned subsidiary of the Company, has dri11ed, logged, cored and set production casing at its AM Stewart BI-A well and its MR Smith l-llA well in the Fayette Field, Jefferson County, Mississippi. The Stewart B l-A well was drilled to a total depth of 4,000 feet, logged and cored five feet of First Wilcox gas pay at 3,581-3,586 feet and nineteen feet of Third Wilcox Oil and Sand at 3,622-3,641 feet. The MR Smith l-11A well was drilled to a total depth of 3,810 feet, logged and cored fifteen feet of First Wilcox Gas Sand at 3,597-3,612 feet and eight feet of Second Wilcox Gas Sand at 3,639-3,646 feet. Production casing has been run to total depth in both wells and completion operations are scheduled to start the week of March 5, 2001. A third well in this prospect, the MR Smith 28A is currently drilling.

The Company has a 43.75% working interest (32.8% net revenue interest) in all three wel1s and the surrounding 4,000 acres. Oil will be marketed with Plains Marketing, LP and gas will be sold to Locust Ride Pipeline.

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."