KFG KFG Resources Ltd

NATCHEZ, Miss., Oct. 27, 2011 /CNW/ -- Fayette Field, Jefferson County, Mississippi (Natchez, Ms) KFG Resources President, Robert A. Kadane, reported that KFG's wholly-owned subsidiary, KFG Petroleum Corporation, has staked location to drill a 6000' Wilcox test , in a new area of the Fayette Field about two miles southwest of Spring Hill, during November 2011. Total production from Fayette is averaging about 130 BOPD, and the Company is receiving a premium over New York spot for sweet crude of $20 to $25 per barrel......currently between $110 and $115 per barrel. After the seismic has been reinterpreted with the data from the Spring Hill LT#1 dry hole a decision will be made next year about a second deep test. The Company retains a 100% working interest in the Fayette wells until payout of all costs(about $1,000,000 US remains to be recovered). Louisiana Two 6000' Wilcox tests are planned on the Roundtree acreage in Concordia Parish before yearend where the Company's 12.5% working interest will increase to 29.375 % after payout of the costs of drilling, completing, and operating the wells. When a salt water disposal well has been approved the Roundtree #1 well should be capable of sustainable production of 50 BOPD. Also, the Company is working in several new areas of Louisiana compiling acreage for additional exploration projects for calendar 2012. In closing, the Company has over $700,000 in cash after the deep dry hole, no debt, and free cash flow in the neighborhood of $200,000 US per month or annualized for $2,400,000 annually. The Company does not anticipate any problem meeting all of its financial requirements for the coming year. KFG Resources CONTACT: Robert A. Kadane, President of KFG Resources , +1-303-825-7080Web Site: http://www.kfgresources.com

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