KFG Resources Ltd. Fayette Field Update


<p>NATCHEZ, Miss., <chron>Dec. 16</chron> /CNW/ -- Robert A. Kadane, President of KFG Resources, reported today on the progress the Company's subsidiary, KFG Petroleum Corporation of Natchez, MS, has made at the Fayette Field, Jefferson County, Mississippi.  The field has stable oil production of 70 barrels of oil per day from the <person>Spring Hill</person> #1 and #2 wells from the shallow Wilcox formation.  Two zones in the <person>Spring Hill</person> #1 will remain behind pipe. Cash flow from the wells is between <money>$90,000</money> and <money>$100,000</money> per month at current market prices of <money>$70</money> per barrel.  A salt water disposal well is operating on a vacuum and costs associated with salt water disposal have dropped from <money>$500</money> per day to <money>$500</money> per month.</p>
<p>Current plans are to drill three wells in the first quarter of 2010 - a deep test to 10,000 feet to test the Lower Tuscaloosa, a south offset to the <person>Spring Hill</person> #1 to confirm that shallow oil pool (a 4,100-foot test), and another Wilcox wildcat to test a prominent 3-D seismic high in the Artman Sand of the Wilcox at 5,200 feet.</p>
<p>KFG has approximately 4,100 acres of leases in the area and owns a 100% working interest (79.16% net revenue interest) in the Spring wells, reverting to a 74.9% working interest (59.4%  revenue interest) after payout of all drilling, seismic, land, exploration, development, taxes, and operating costs.</p>
<p>The Company's common shares are listed on the TSX Venture Exchange, <location>Vancouver</location>, B.C., trading symbol "KFG".  For additional information, please contact <person>Mr. Kadane</person> at (303) 825-7080.</p>
<p>The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.</p>


For further information: For further information: Mr. Robert A. Kadane, President of KFG Resources, +1-303-825-7080

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