Mr. Robert A. Kadane, President of KFG Resources Ltd., reported today that the Company's wholly-owned subsidiary, KFG Petroleum Corporation, has drilled a dry hole at its Ransom #9-1 location, Comanche County, Kansas. This well, drilled as a 6,600 foot Arbuckle test, encountered multiple gas shows, as the structure, identified by 3-D seismic, was confirmed. A follow up well is planned to be drilled in the spring of 2002 to test the flank of the structure. Mr. Kadane also reported that the first well drilled by KFG Petroleum following the 3-D seismic, the Ransom #18-1, which was drilled and completed in late November, 2001, will be put on production in January of 2002, at an anticipated rate in excess of 1,000,000 cubic feet of gas per day. Mr. Kadane noted that, assuming production rates on the Ransom #18-1 hold up, an offset well, the Ransom #18-2, will also be drilled in the spring of 2002. The Company owns a 24.7% working interest (20.08% net revenue interest) in about 2,012 acres in the area of the Ransom #18-1 producer.

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."