October 13, 2008

Kentucky USA Energy, Inc. Announces Contract With Atmos Energy Corp.

Kentucky USA Energy, Inc. (OTCBB: KYUS), an early stage natural gas exploration and production company announced today that the Company and natural gas distributor Atmos Energy Corporation (NYSE: ATO) have entered into a contract for Atmos to purchase the Company's production of gas from its wells drilling into the New Albany Shale formation on its properties in western Kentucky. Both companies will work together to lay pipe and connect into the Atmos pipeline in the coming months.

Steven Eversole, CEO of Kentucky USA Energy comments, "We are excited to work closely with Atmos on our New Albany Shale project and we believe that this strategic alliance will enable our efficient delivery of production from the project for the foreseeable future. This relationship with Atmos will play a significant part in the Company's growth and in achieving our corporate objectives."

The Company's initial five wells are in the completion and testing stages, while drilling continues on the J & J Johnston #1 well. Kentucky USA expects to begin delivering gas from its wells into the Atmos pipeline by the end of this year.

About Kentucky USA Energy, Inc.

Headquartered in London, KY, Kentucky USA Energy, Inc. engages in the acquisition, exploration, and development of oil and natural gas resource properties, with a primary focus on New Albany shale gas in the Illinois Basin in western Kentucky. The Company is a growing independent energy company with the experience and technological expertise to develop its gas resources in the Illinois Basin's New Albany Shale.

More information about the Company may be found at www.kusaenergy.com

Forward-Looking Statements

Certain statements in this news release, which are not historical facts, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties. Words such as "expects", "intends", "plans", "may", "could", "should", "anticipates", "likely", "believes" and words of similar import also identify forward-looking statements. Forward-looking statements are based on current facts and analyses and other information that are based on forecasts of future results, estimates of amounts not yet determined and assumptions of management. Actual results may differ materially from those currently anticipated due to a number of factors which may be beyond the reasonable control of Kentucky USA Energy, including, but not limited to, the availability and pricing of additional capital to finance operations, including the drilling of its initial gas wells, longer term drilling programs and additional leasehold acquisitions, the viability of the shale gas fields in the Illinois Basin in western Kentucky, the ability of Kentucky USA Energy to build and maintain a successful operations infrastructure and to effectively drill and develop producing wells, the successful negotiation and execution of cost-effective third-party gas drilling and distribution agreements, the continued commitment of drill rig operators and future economic conditions and energy prices. Readers are urged not to place undue reliance on the forward-looking statements, which speak only as of the date of this release. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this release. Additional information on risks and other factors that may affect the business and financial results of Kentucky USA Energy can be found in the filings of Kentucky USA Energy with the U.S. Securities and Exchange Commission.