Mr. Robert A. Kadane, President of KFG Resources Ltd., announced today that KFG Petroleum Corporation, a wholly-owned subsidiary of the Company, has completed a second re- entry well, the Carpenter #1, in Catahoula Parish, Louisiana. This well will provide service to the town of Harrisonburg, Louisiana, along with the Company's first re-entry in this area, the Lottie K. Gibson #1. The Carpenter well tested 130,000 cubic feet of gas per day on a 5/64th choke, flowing tube pressure 900 pounds, from a depth of 2,524 feet. KFG owns an 80% working interest (64% net revenue interest) in the well and surrounding 160 acre drillsite. The well should start production on or about October 1, 2001.

Mr .Kadane also announced that the results of a 3D seismic survey in Commanche County , Kansas, were such that KFG Petroleum plans to drill two wells on the survey this fall. The first well, the Ransom #1, SE/4 Section 18, T34N, RI9W, will be started on or about October 1, 2001, to a depth of 5,400 feet. KFG has a 24.7% working interest (20.07% net revenue interest) in the well and 1,692 acres of newly acquired leases.

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."