UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) ~~July 23~~ September 14, 2010

Kentucky USA Energy, Inc.

(Exact name of registrant as specified in its charter)

Kentucky USA Energy, Inc. (Exact name of registrant as specified in its charter)

Delaware	333-141480	20-5750488
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

321 Somerset Road, Suite 1, London, Kentucky 40741
(Address of principal executive offices)	(Zip Code)

(606) 878-5987 ~~(Registrant’s telephone number, including area code)~~

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 18.01. ~~Entry~~Other ~~into a Material Definitive Agreement~~Events

OnLegal July 23, 2010, Kentucky USA Energy, Inc. (the “Company”) entered into a farm-out agreement (the “Farm-Out Agreement”) with WW Petroleum Service, Inc., (“WWPS”) relating to six oil and gas leases (the “WWPS Leases”) in Christian County, Kentucky covering approximately 1,073 acres. WWPS owns a one hundred percent (100%) working interest in the WWPS Leases. Pursuant to the terms of the Farm-Out Agreement, the Company acquired the rights to drill, complete and produce wells to explore for oil and gas from any formation more than 1,250 feet below the surface.Proceedings

~~Under the~~KY ~~terms~~USA ofEnergy ~~the~~Chapter ~~Farm-Out~~11 ~~Agreement,~~Bankruptcy the Company will pay WWPS an overriding royalty interest (“ORI”) of 1/8 of 8/8 from all production attained by the Company from any formation more than 1,250 feet below the surface. The Company can drill only one well per lease at any one time. Once a well is completed on a lease, the Company can drill an additional well on that lease. The Company must drill at least three (3) wells per year for a period of three (3) years for a total of not less than nine (9) wells. The Company must start drilling its first well on the WWPS Leases within one (1) year of the date of the Farm-Out Agreement, it must start six (6) wells within two (2) years and nine (9) wells within three (3) years. Failure to meet this drilling timetable shall release all undeveloped acreage back to WWPS.Proceedings

If the first well is a dry hole on the formations lying more than 1,250 feet below the surface, but there is production from zones above 1,250 feet, the Company can complete such well and produce from the formations between the surface and 1,250 feet and WWPS will be entitled to a 1/8 of 8/8 ORI on this well location.Background

InOur wholly ~~the~~owned operating subsidiary, KY USA Energy, Inc. (“KY USA Energy”), ~~event~~through the ~~first~~execution ~~well~~of ~~produces~~a ~~from~~Farm-Out aAssignment, ~~formation~~amended ~~lying~~and ~~more~~corrected ~~than~~as 1of June 18,~~250~~ ~~feet~~2008 ~~below~~ (the ~~surface~~“K&D Farm-Out Agreement”), ~~then~~with inK&D ~~that~~Energy, ~~event~~a ~~the~~Kentucky ~~Company~~partnership ~~will~~(“K&D ~~have~~Energy”), secured ~~the~~a ~~first~~100% ~~right~~working tointerest ~~drill~~and a ~~twin~~ ~~well,~~75% ~~for~~net ~~the~~revenue ~~purpose~~interest offrom ~~drilling~~K&D Energy ~~from~~in ~~the~~a ~~surface~~leasehold ~~down~~in toWestern ~~1,250 feet. In~~Kentucky ~~that~~covering ~~event~~approximately 3,000 ~~WWPS~~acres across ~~will~~nine beoil ~~entitled~~and togas aleases ~~1/8~~located ofin ~~8/8~~Muhlenberg, ~~ORI~~Christian onand Todd ~~production~~Counties, targeting gas extraction from the ~~twin~~New ~~well~~Albany Shale (the “K&D Leasehold”). ~~This~~To ~~right~~date, toKY ~~drill~~USA aEnergy ~~twin~~has ~~well~~drilled ~~will~~fifteen (15) ~~last~~wells ~~for~~on ~~three~~the ~~(3)~~K&D ~~years~~Leasehold. ~~from~~Sale ~~the~~of ~~date~~gas from certain of ~~spudding~~these inwells ~~the~~began ~~original~~in ~~well~~October 2009.

~~With~~On May ~~respect~~21, 2010 KY USA Energy received a letter from legal counsel to ~~one~~K&D Energy and each of the ~~six~~landowners (the “Landowners”) of the nine leases, aof ~~1/32~~which the K&D Leasehold is comprised. The letter claimed that KY USA Energy was in default of ~~7/8~~its ~~ORI~~obligations under the K&D Farm-Out Agreement. Specifically, ~~which~~the ~~would~~letter ~~otherwise~~claimed ~~have~~that KY USA ~~been~~Energy ~~assigned~~was tonot ~~WWPS,~~paying ~~will~~K&D ~~instead~~Energy beand ~~assigned~~the toLandowners the ~~original~~correct ~~owner~~amount of royalties due them on the ~~lease~~ ~~for~~sale ~~any~~of ~~well~~gas ~~completed~~pumped from the wells on ~~this~~the ~~property. Also~~K&D Leasehold; that KY USA Energy had not drilled the minimum of 12 wells per year required under the K&D Farm-Out Agreement and that, ~~one~~therefore, ~~formation~~KY USA ~~known~~Energy’s asrights and interests under the ~~Jackson~~K&D ~~formation~~Farm-Out onAgreement, ~~one~~except with respect to the wells that already had been drilled and completed, were terminated; that if the proper amount of royalties was not paid with respect to the ~~other~~wells ~~six~~that ~~leases~~already ishad ~~reserved~~been ~~from~~drilled and completed, KY USA Energy would lose ~~this~~all rights to and interests in those wells and that the K&D Farm-Out Agreement would be deemed terminated with respect to those wells; that KY USA Energy was in breach of certain duties to repair damages on the leased properties caused by its drilling efforts; and ~~remains~~that, with respect to the design and construction of its pipeline gathering system, KY USA Energy was in breach of certain local safety regulations and certain state law requirements relating to the ~~possession~~obtaining of ~~WWPS~~required licenses and permits and had failed to obtain certain right-of-way easement agreements from certain of the Landowners.

~~120~~As ~~days~~a ~~after~~consequence ~~completion~~ of athe ~~twin~~dispute ~~well~~with orthe ~~completion~~K&D ofEnergy anand ~~original well above 1,250 feet on any of~~ the ~~leases~~Landowners, the ~~Company will be able to exercise rights to a new~~ ~~well~~Landowners ~~location~~shut ondown ~~such~~the ~~lease~~KY ~~for~~USA ~~the~~Energy ~~purpose~~wells ofand ~~production~~locked ~~from~~out ~~the~~KY ~~surface~~USA toEnergy afrom ~~depth~~their ~~of 1,250 feet~~properties. ~~The~~Because ~~Company~~of ~~can~~this ~~secure~~action, ~~only~~KY ~~one~~USA ~~location~~Energy athas anot been ~~time~~able ~~for~~to access the ~~purpose~~wells ofthat ~~production~~it ~~from~~drilled ~~the~~and ~~surface~~is tono alonger ~~depth~~able ofto ~~1,250~~produce ~~feet,~~and ~~unless~~sell ~~otherwise~~gas ~~agreed~~from byits ~~WWPS~~wells inthat ~~writing~~were shut down. ~~120~~As ~~days~~a ~~after~~result, ~~completion~~our ofbusiness ~~each~~and ~~well~~KY ~~drilled~~USA byEnergy’s ~~the~~operations ~~Company,~~have ~~the~~been ~~Company can exercise the right to one~~substantially ~~additional well location~~impaired.

~~The~~We and KY ~~Company~~USA ~~has~~Energy strongly deny the ~~right~~allegations toof ~~twin~~K&D orEnergy ~~offset~~and ~~drill~~the Landowners. We onbelieve ~~each~~that ~~individual~~case ~~lease~~law in the State of Kentucky ~~WWPS~~supports ~~Leases~~our ~~only~~position ~~after~~that ~~drilling~~net arevenue ~~well~~interest toroyalties ~~test~~should be paid on the net ~~New~~amount ~~Albany~~of ~~Shale~~gas ~~formation~~pumped onfrom our wells after the removal of inert materials and ~~each~~other impurities rather than on the gross amount of gas measured at the ~~WWPS~~well head ~~Leases~~prior to processing.

~~All~~Bankruptcy ~~currently~~Court ~~existing wells on the WWPS Leases, whether in production or not, are excluded from the Farm-Out Agreement.~~Proceedings

~~The~~As a ~~Company~~result ~~has~~of ~~agreed~~the toimpairment ~~purchase~~of ~~all~~its ~~gas~~business ~~produced~~due ~~above~~to the ~~New~~Landowners’ ~~Albany~~lock-out, ~~Shale~~KY byUSA ~~WWPS~~Energy atfiled ~~the~~a ~~well~~voluntary ~~head~~petition ~~price~~for ~~equal~~reorganization toon ~~the~~September ~~“Prospect”~~14, of2010 in the ~~Texas~~United ~~Gas Transmission~~States ~~Zone~~Bankruptcy SLCourt, ~~(less~~Western ~~cleaning~~District ~~fee~~of ~~and~~Kentucky, ~~deduction~~Bowling ~~for~~Green Division ~~inert~~(the ~~materials)~~“Bankruptcy ~~first~~Court”), ofpursuant ~~the~~to ~~month~~Chapter ~~index,~~11 orof ~~upon~~Title ~~any~~11 ~~other~~of ~~agreed~~the ~~upon~~United ~~index~~States Code. The ~~Company~~ ~~will~~protection ~~furnish~~of ~~and~~Chapter ~~install~~11 ~~meters,~~is ~~well~~expected ~~head~~to ~~equipment,~~allow ~~and~~KY upUSA Energy to ~~four~~reorganize ~~hundred~~its ~~feet~~business ofoperations ~~gathering~~and ~~line for such wells~~finances. ~~With~~The ~~respect~~case tonumber ~~this~~assigned ~~gas,~~for ~~the~~KY USA ~~Company~~Energy’s ~~will~~reorganization ~~receive~~proceeding ais ~~1/8 of 8/8 ORI~~10-11424.

~~With~~ KY ~~respect~~USA toEnergy ~~the~~has ~~existing~~retained ~~Corley~~bankruptcy #7counsel, ~~and Corley #8 wells owned by WWPS~~Harned, ~~the~~Bachert ~~Company has~~& ~~agreed~~McGehee ~~to finish the installation required to put said wells into production~~PSC ~~and~~(“HBM”), to ~~make any repairs made necessary by the installation of gathering lines~~ ~~that~~represent ~~would~~it ~~be necessary to place said wells into complete operation. WWPS has agreed to assign to the Company a 1/8 of 8/8 ORI~~ in ~~all gas produced from these two wells, from~~ the ~~Jackson~~bankruptcy ~~Sand Formation only, for as long as gas is produced and sold by WWPS~~proceedings.

InOn September ~~event~~15, 2010, HBM filed a motion, among others, with the Bankruptcy Court to require the Landowners to turn over to KY USA Energy possession and control of KY USA Energy’s property on the K&D Leasehold, including its wells. In a ~~shut-in~~hearing ~~gas~~on ~~well~~September 24, 2010, the ~~Company~~Bankruptcy ~~will~~Court granted ~~have~~HBM’s ~~five~~motion and ordered the Landowners (5i) ~~years~~to deliver to ~~place~~KY ~~said~~USA ~~well~~Energy ~~into~~its ~~production. After~~property ~~five~~and (5ii) ~~years~~not ~~WWPS~~to ~~will~~impair ~~have~~or ~~the~~interfere ~~option~~in toany way with KY USA Energy’s ~~take~~access ~~ownership~~to and operation of ~~such~~its ~~well~~property, including its wells.

~~The~~More ~~foregoing~~information ~~description~~about ofKY ~~the~~USA ~~Farm-Out~~Energy’s ~~Agreement~~reorganization iscase ~~qualified~~may inbe ~~its~~obtained ~~entirety~~from bythe ~~reference~~Clerk toof the ~~Farm-Out~~United ~~Agreement,~~States aBankruptcy ~~copy~~Court for the Western District of Kentucky, ~~which~~whose office is ~~attached~~located toat ~~this~~450 ~~report~~U.S. Courthouse, 601 W. Broadway, asLouisville, ~~Exhibit~~Kentucky 1040202.1 The ~~and~~telephone ~~incorporated~~number ~~herein~~for bythe ~~reference~~Clerk’s office is (502) 627-5700.

ToCivil perform its obligations under the Farm-Out Agreement, the Company will need to raise additional capital. In order to obtain this capital, the Company may need to sell additional shares of its common stock or other securities, or borrow funds from private lenders. There can be no assurance that the Company will be successful in obtaining additional funding in the required amounts or on acceptable terms, if at all. If the Company is not able to raise capital and meet the terms of the Farm-Out Agreement, the Company’s business, results of operations, liquidity and financial condition will suffer materially.Action

~~Item~~On June 929, 2010, Thomasson Petroleum Enterprises, Inc.01 (“TPE”) filed a civil action (the “Complaint”) against KY USA Energy, in the Christian Circuit Court, Division No. I, Commonwealth of Kentucky (the “County Court”) (Case No. 10-CI-00914). ~~Financial~~TPE ~~Statements~~and KY USA Energy entered into a Farm-Out Agreement dated August 20, 2009 (the “TPE Farm-Out Agreement”) pursuant to which TPE granted KY USA Energy certain drilling rights on five leaseholds (the “TPE Leaseholds”) located in Christian and ~~Exhibits~~Muhlenberg Counties, Kentucky. According to representations made by TPE in the TPE Farm-Out Agreement, TPE is the owner of 100% of the working interests in the TPE Leaseholds. In the Complaint, TPE claimed that KY USA Energy failed to pay TPE a $200,000 fee due TPE upon execution of the TPE Farm-Out Agreement. TPE is demanding, among other things, that the County Court find judgment in favor of TPE in the sum of $200,000, with interest. KY USA Energy denies that it owes TPE this money. Pursuant to the bankruptcy proceedings discussed above, this action against KY USA Energy is currently stayed.

(d) Exhibits

10.1 Form of Farmout Agreement by and between WW Petroleum Services, Inc. and Kentucky USA Energy, Inc. dated July 23, 2010

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Kentucky USA Energy, Inc.
Date: July 30, 2010	By:	/s/ Steven Eversole
Date: September 27, 2010	By:	/s/ Steven Eversole
		Steven Eversole
		Chief Executive Officer

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