Kentucky USA Energy Inc., London, Ky., (OTCBB: KYUS) has entered into a farm-out with Greenville, Ky.-based Thomasson Petroleum Enterprises Inc. to acquire from Thomasson certain drilling rights on farm-out acreage in Todd, Muhlenberg and Christian counties in western Kentucky.

This additional farm-out acreage is adjacent to the company’s existing leasehold property in the New Albany shale.

Kentucky USA acquired the right to drill up to 40 wells on the subject leases to explore for oil and gas in and above the New Albany. The company must drill 10 wells in the each year of the agreement to be eligible to drill an additional ten wells in the following year, up to a maximum of 40 wells over four years. Thomasson, the leasehold owner, will retain a 25% net revenue interest in the wells that Kentucky USA drills on the Thomasson acreage into the Albany shale and an 18.75% net revenue interest in any oil wells drilled above the top of the Albany shale.

Kentucky USA chief executive Steven Eversole says, “This farm-out agreement gives us the ability to further develop into areas that we believe have strong gas potential and we expect to begin a drilling program on this acreage shortly.”

Kentucky USA focuses on New Albany shale gas in the Illinois Basin in western Kentucky.