US Natural Gas Corp Kentucky ("KY"), a wholly owned subsidiary, concentrates on oil producing activities mainly in the counties of Green, Hart, Adair, Russell, Edmonson, and Monroe in Kentucky. E 3 acts as the bonding and operating entity for all wells in Kentucky in which KY maintains a working interest. On average, KY maintains a 95% working interest and 83% net revenue interest in each well. To date, E 3 has 19 wells under bond of which 9 are currently producing commercially viable crude with minimal revenue. It is KY's intentions to continue to drill new wells on the current leasehold base as well as acquire previously drilled wells for re-entering and placing into production.

On September 5, 2012, the Company entered into an Asset Purchase Agreement with Madison Brothers Investments, LLC for the sale of certain oil producing assets located in Edmonson County, Kentucky. These assets have been previously referred to as the “Pine Grove Project” throughout the Company’s previous press releases and filings with the Securities and Exchange Commission. Under the terms, the Company is to convey via deed, assignment, and/or transfer, twenty five equipped oil wells, two water injection wells, and five oil and gas leases.  The 182 acres of mineral rights purchased by the Company in the Purchase transaction were sold to a non-affiliate third party in a separate transaction. The transaction was finalized and fully funded on September 13, 2012. Terms of the transactions were not disclosed.

In July 2011, the Company announced the initiation of a new natural gas development project in Whitley County, Kentucky. To date, the Company has acquired two wells capable of producing natural gas and is in discussions to acquire five to seven additional wells. The Company has reached an agreement with Magnum Hunter Production for the transmission of the Company's produced natural gas to its sales point.