Kentucky USA Energy Inc., London, Ky., (OTCBB: KYUS) says it has reached total depth of 3,460 feet on its Swinney #1 well in western Kentucky.

Logs from Swinney #1, which is in the New Albany shale, confirm that approximately 140 feet of shale formation was encountered. The Dutch Creek formation, which was not in the original reserves study, was also encountered in the well between 2,582- and 2,594 feet.

Initial flow tests from the Dutch Creek formation show an approximate potential flow of more than 150,000 cubic feet of gas per day.

Drilling is at 1,522 feet at the J & Johnston #4 well and is expected to reach total depth by the end of April. The Golden Eagle #1 well and Slinker #2 wells have been perforated and are scheduled for fracturing during by May 1.

Hunter Wells #4 well has also been perforated and stimulated in the Dutch Creek formation and is showing oil in the formation that was not indicated in the initial engineering reports. Kentucky USA says initial testing shows a projected estimated flow of 100,000 cubic feet of gas and five barrels of oil per day.

Kentucky USA chief executive officer Steven Eversole says, "We have been pleased with the continued success in our drilling efforts. While we are somewhat surprised with the development of the additional formations that are below the New Albany Shale, we will remain focused on our original target. Additional expected flow from the reservoirs we found in the Dutch Creek formation should enhance our position in the area."

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