Mr. Robert A. Kadane, President of KFG Resources Ltd., announced today that KFG Petroleum Corporation, a wholly-owned subsidiary of the Company, has completed the MR Smith 1-l1A well in Fayette Field, Jefferson County, Mississippi, in the Second Wilcox Gas Sand at 3,642 feet, flowing 194,000 cubic feet of gas per day on a 5/64" choke and FTP of 1330#.

As previously reported, production casing has been set in a second well, the Stewart B1-A, and completion operations are continuing. A third well, the MR Smith 28A was drilled to 4,000 feet and completed as a dry hole.

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

The Company's common shares are listed on the Canadian Venture Exchange, Vancouver, B.C., 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."