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U.S. Energy Corp. Reports 2012 Highlights and Selected Financial Results

U.S. Energy Corp. Reports 2012 Highlights and Selected Financial Results

  Announces the Initial Production Rates From Two Bakken and Two Three Forks
                               Formation Wells

                        Provides an Operational Update

RIVERTON, Wyo., March 18, 2013 (GLOBE NEWSWIRE) -- U.S. Energy Corp.
(Nasdaq:USEG) ("USE" or the "Company"), today reported 2012 highlights and
selected financial results for the year ended December 31, 2012 and the period
subsequent to year end, announced the initial production rates from four wells
in the Williston Basin of North Dakota, and provided an operational update.

Selected Highlights for 2012 and Period Subsequent to December 31, 2012

Financial and Operational Results

  *Produced 444,702 BOE, or 1,215 BOE/D during the year from 83 gross (15.05
    net) producing wells at December 31, 2012.
  *Recognized a company record $32.5 million in oil and gas revenue during
    2012, compared to revenues of $31.0 million during 2011. The $1.5 million
    increase in revenue is primarily due to higher oil sales volumes in 2012
    when compared to 2011.
  *At December 31, 2012, we had $2.8 million in cash and cash equivalents.
    Our working capital (current assets minus current liabilities) was $12.8
    million.
  *During the year ended December 31, 2012, we received an average of $2.7
    million per month from our producing wells with an average operating cost
    of $462,000 per month (excluding workover costs) and production taxes of
    $291,000, for average cash flows of $2.0 million per month from oil and
    gas production before non-cash depletion expense.
  *Excluding the $5.2 million non-cash impairment taken on our oil and gas
    properties during the period, oil and gas operations produced operating
    income of $6.9 million during the year ended December 31, 2012 as compared
    to operating income of $5.4 million during the year ended December 31,
    2011. The increase is primarily due to (a) a $4.4 million increase in oil
    revenues during 2012 compared to 2011 and (b) $1.1 million lower lease
    operating expenses in the year ending December 31, 2012 as compared to the
    prior year. This increase was partially offset by $896,000 higher
    depletion expense in 2012 and a $2.8 million decrease in natural gas and
    natural gas liquids revenues primarily due to production declines from our
    wells in the Gulf Coast.
  *At year-end 2012, the Company had estimated proved reserves of 2,913,324
    BOE (90% oil and 10% natural gas), with a standardized measure value of
    $70.1 million and a PV10 of $76.5 million.
  *On April 10, 2012, the borrowing base under the Wells Fargo Senior Credit
    Facility was redetermined and was increased from $28 million to $30
    million and the commitment amount increased from $75 million to $100
    million. At December 31, 2012 we had $10 million outstanding under the
    facility to fund our drilling programs.
  *During the year ended December 31, 2012, we recorded a net loss after
    taxes of $11.2 million as compared to a net loss after taxes of $4.8
    million during the same period of 2011. Earnings before interest, income
    taxes, depreciation, depletion and amortization, accretion of discount on
    asset retirement obligations, non-cash impairments, unrealized derivative
    gains and losses and non-cash stock compensation expense ("EBITDAX"),
    which is a non-GAAP performance measure was $13.2 million for the year
    ended December 31, 2012, an increase of 33.2% from $9.9 million for the
    same period of 2011. Please refer to the respective reconciliations in
    this release for additional information about this measure.

Mount Emmons Molybdenum Project

On October 10, 2012, the Company submitted a Mine Plan of Operations ("MPO")
to the U.S. Forest Service. At this time, we are continuing work with the U.S.
Forest Service in their completeness review of the MPO. Upon receiving a
completeness determination, we expect to enter the National Environmental
Protection Act ("NEPA") review and permitting process.

Acquisitions and Divestitures

  *On January 25, 2012 (but effective December 1, 2011), the Company sold an
    undivided 75% of its undeveloped acreage in the SE HR Prospect and the
    Yellowstone Prospect to GeoResources, Inc. (56.25%) and Yuma Exploration
    and Production Company, Inc. (18.75%) for $16.7 million. Under the terms
    of the agreement, the Company retained the remaining 25% of its interest
    in the undeveloped acreage and its original working interest in 8 high
    interest wells in the SE HR and Yellowstone prospects and two wells
    drilled with Murex Petroleum Corporation. Our average working interest in
    the remaining locations is approximately 8.75% and net revenue interests
    in new wells after the sale is in the range of 6.7375% to 7.0%,
    proportionately reduced depending on Zavanna's actual working interest
    percentages.
  *On June 8, 2012, we sold an undivided 87.5% of our Daniels County, Montana
    acreage to Greehey & Company Ltd for $3.7 million. Under the terms of the
    agreement, we retained a 12.5% working interest in the acreage and
    reserved overriding royalty interests in leases we owned that had in
    excess of 81% NRI. Greehey also committed to drill a vertical test well to
    depths sufficient to core the Bakken and Three Forks formations on or
    before December 31, 2015. We delivered an 80% NRI to the purchaser and a
    1% ORRI to a land broker. We also paid the broker a 10% commission for the
    cash consideration paid by the purchaser.
  *On September 21, 2012, but effective July 2, 2012, the Company acquired
    working interests in producing Bakken and Three Forks formation wells and
    related acreage in McKenzie, Williams and Mountrail Counties, North
    Dakota. Under the agreement, the Company acquired working interests in 23
    drilling units with an estimated 294,000 BOE in proved reserves for $2.3
    million after adjusting for related revenue and operating expenses from
    the effective date through September 1, 2012. The Company's working
    interest in the drilling units averages 1.45% and ranges from less than 1%
    to approximately 5%. All acreage (~400 net acres) is currently held by
    production and produces approximately 45 BOE/D net to the Company. On a
    going forward basis, there is a potential for the Company to participate
    in an estimated additional 135 gross wells from the Bakken and Three Forks
    formations combined.

Subsequent Events

  *In January 2013, the Company sold its aircraft hangar and related
    facilities for $767,000.
  *On March 5, 2013, the Company sold its corporate aircraft for $1.9
    million.
  *On March 5, 2013 the Company entered into a Purchase and Sale Agreement to
    sell its Remington Village Apartment Complex located in Gillette, Wyoming
    for $15.0 million. The agreement is subject to due diligence, with the
    transaction anticipated to close on May 6, 2013.

Operations Update

Williston Basin, North Dakota

Initial Production Rates – Producing Wells

  *The Bunning 25-36 #1H well was completed in January of 2013. On January
    13, 2013 the well had an early 24-hour flow back rate of 1,988 BOE/D on a
    32/64' restricted choke during the drill out of the plugs. The initial
    production rate consisted of approximately 1,750 barrels of oil and 1,430
    MCF of natural gas. The well is a Bakken formation target and the Company
    has an approximate 7.7% WI and 5.9% NRI in this well.
  *The KA Sutton 5300 24-15T well was completed in February of 2013. On
    February 2, 2013 the well had an early 24-hour flow back rate of 1,800
    BOE/D on a 32/64' restricted choke during the drill out of the plugs. The
    initial production rate consisted of approximately 1,573 barrels of oil
    and 1,361 MCF of natural gas. The well is a Three Forks formation target
    and the Company has an approximate 7.7% WI and 5.9% NRI in this well.
  *The Browning 28-33 #1H well was completed in February of 2013. On February
    10, 2013 the well had an early 24-hour flow back rate of 1,550 BOE/D on a
    42/64' restricted choke during the drill out of the plugs. The initial
    production rate consisted of approximately 1,382 barrels of oil and 1,010
    MCF of natural gas. The well is a Bakken formation target and the Company
    has an approximate 4.7% WI and 3.7% NRI in this well.
  *The Martinez 36-25 #1 TFH well was completed in February of 2013. On
    February 19, 2013 the well had an early 24-hour flow back rate of 1,207
    BOE/D on a 38/64' restricted choke during the drill out of the plugs. The
    initial production rate consisted of approximately 1,056 barrels of oil
    and 909 MCF of natural gas. This well is the first Three Forks formation
    target drilled by Zavanna. The Company has an approximate 8.5% WI and 6.6%
    NRI in this well.

Williston Basin Wells in Progress:

                                             Working  Net
Well Name            Operator    Formation   Interest Revenue  Status
                                                      Interest
                     Emerald Oil                               Drilled -
Mongoose 1-8-5H      Inc.        Bakken      0.29%    0.23%    completion
                                                               pending
                                                               Drilled -
Rogers 1-12 #1TFH    Zavanna LLC Three Forks 9.36%    7.30%    completion
                                                               pending
                     Brigham Oil                               Drilled -
State 36-1 #4TFH     & Gas, L.P. Three Forks 3.64%    2.88%    completion
                                                               pending
Dobias               Liberty                                   Drilled -
152-103-32-29-1H     Resources   Bakken      1.91%    1.49%    completion
                     LLC                                       pending
                     EOG                                       Drilled -
Van Hook 19-2523H    Resources   Bakken      0.36%    0.27%    completion
                     Inc.                                      pending
                     Brigham Oil                               Drilled -
Hovde 33-4 2TFH      & Gas, L.P. Three Forks 2.47%    1.95%    completion
                                                               pending
                     EOG                                       Drilled -
Van Hook 126-2523H   Resources   Bakken      0.36%    0.27%    completion
                     Inc.                                      pending
                     Emerald Oil                               Drilled -
Pirate 1-2-1 1H      Inc.        Bakken      3.67%    2.75%    completion
                                                               pending
Dobias               Liberty
152-103-32-29-11 TFH Resources   Three Forks 1.91%    1.49%    Drilling
                     LLC
Caper 1-15-22H       Emerald Oil Bakken      5.11%    3.99%    Drilling
                     Inc.
Young 31-30 #1H      Zavanna LLC Bakken      2.69%    2.10%    Spud - April
                                                               2013

South Texas

Buda Formation Test Well

The Company and Crimson Exploration (operator) have continued to monitor the
Buda formation drilling that is occurring immediately to the east and south of
our Booth/Tortuga Prospect. Texas Railroad Commission data suggest that
favorable drilling results have occurred in wells immediately adjacent to our
holdings. These wells are being drilled at a depth of approximately 7,000'
with a 3,000' to 4,000' lateral and being completed without fracture
stimulation. The economics of the nearby Buda wells appear to be very
attractive. Therefore, Crimson has proposed to drill our first Buda test well
in April 2013. The Company plans to participate in the Beeler #2H well and
looks forward to announcing the results post completion. The Company has an
approximate 30% WI and 24.17% NRI in this well.

East Texas

The Fender #1 Wilcox test well operated by Mueller Exploration, Inc. is also
scheduled to spud in April, 2013. The well will be drilled to a depth of
1,600' and is targeting the oil bearing zone of the Wilcox sand. The Company
has an approximate 19.88% WI and 15.40% NRI in this well.

CEO Statement

"Over the course of the last year we have maintained the company's stabilized
production of over 1,200 net barrels of oil equivalent per day.During this
time we sold undeveloped acreage in order to maintain a conservative debt
ratio and strong balance sheet.At the same time, we have sought out and
purchased accretive production and reserves at a lower replacement cost than
the reserves we sold.This strategy will allow us to continue to fund our
active programs for the balance of 2013 as well as look for additional growth
opportunities on a selective basis," said Keith Larsen, CEO of U.S. Energy
Corp."Additionally, with the filing of the Mine Plan of Operations with the
U.S. Forest Service we are continuing to work through the process with the
ultimate goal of a completeness determination and acceptance of the MPO
document in anticipation of achieving a major milestone in entering the NEPA
process at our Mount Emmons Project," he added."We also eagerly look forward
to drilling our first Buda formation well in the near term," he concluded.

Financial Highlights

The following table sets forth selected financial information for the years
ended December 31, 2012 and 2011.This information is derived from the audited
financial statements filed with the Annual Report on Form 10-K for the year
ended December 31, 2012, and should be read in conjunction with the Annual
Report and the financial statements contained therein, including the notes to
the financial statements.

                                                     
U.S. ENERGY CORP.
CORPORATE PRESENTATIONS
(Unaudited)
(Amounts in thousands, except per share amounts)
                                                     
                                     December 31,     December 31,
                                     2012             2011
Balance Sheet:                                        
Cash and cash equivalents             $2,825         $12,874
Current assets                        $26,015        $41,604
Current liabilities                   $13,253        $20,937
Working capital                       $12,762        $20,667
Total assets                          $140,827       $162,439
Long-term obligations                 $11,457        $13,532
Shareholders' equity                  $116,117       $126,781
                                                     
Shares Outstanding                    27,652,602      27,409,908
                                                     
                                     For the years ended December 31,
                                     2012             2011
Income Statement:                                     
Operating revenues                    $32,534        $30,958
Loss from continuing operations       $(10,344)      $(5,216)
Other income & expenses               $849           $(717)
Benefit from income taxes             $44            $3,755
Discontinued operations, net of taxes $(1,794)       $(2,629)
Net loss                              $(11,245)      $(4,807)
Net loss per share                                    
Basic and diluted                     $(0.41)        $(0.18)
Diluted                               $(0.41)        $(0.18)
Weighted average shares outstanding                   
Basic and diluted                     27,466,549      27,238,869
Diluted                               27,466,549      27,238,869
                                                     

Non-GAAP Financial Measures

EBITDAX

In addition to reporting net income (loss) as defined under GAAP, in this
release we also present net earnings before interest, income taxes,
depreciation, depletion, and amortization, accretion of discount on asset
retirement obligations, non-cash impairments, unrealized derivative gains and
losses and non-cash stock compensation expense ("EBITDAX"), which is a
non-GAAP performance measure. EBITDAX excludes certain items that the Company
believes affect the comparability of operating results and can exclude items
that are generally one-time or whose timing and/or amount cannot be reasonably
estimated. EBITDAX is a non-GAAP measure that is presented because the
Company believes that it provides useful additional information to investors,
as a performance measure. EBITDAX does not represent, and should not be
considered an alternative to GAAP measurements, such as net income (loss) (its
most directly comparable GAAP measure), or as a measure of liquidity, and our
calculations thereof may not be comparable to similarly titled measures
reported by other companies.We also believe that EBITDAX is useful to
investors because similar measures are frequently used by securities analysts,
investors, and other interested parties in their evaluation of companies in
similar industries.Our management uses EBITDAX to manage our business,
including preparation of our annual operating budget and financial
projections.Our management does not view EBITDAX in isolation and also uses
other measurements, such as net income (loss) and revenues, to measure
operating performance.The following table provides a reconciliation of net
income (loss) to EBITDAX for the periods presented:

                                                             
                                             For the years ended December 31,
                                             2012             2011
Net (loss) income                             $(11,245)      $(4,807)
Impairment of oil and natural gas properties  5,189           ----
Impairment of corporate aircraft and          2,299           ----
facilities
Impairment of Remington Village, net of tax   1,891           3,063
Accretion of asset retirement obligation      34              23
Stock-based compensation expense              507             1,611
Unrealized (gain) loss on commodity           (1,070)         (1,126)
derivatives
Income Taxes                                  (44)            (3,755)
Interest Expense                              203             326
Depreciation, depletion and amortization      15,457          14,593
EBITDAX (Non-GAAP) ^(1)                       $13,221        $9,928
                                                             

PV10

PV10 is widely used in the oil and gas industry and is considered by
institutional investors and professional analysts when comparing
companies.However, PV10 data is not an alternative to the standardized
measure of discounted future net cash flows, which is calculated under GAAP
and includes the effects of income taxes.The difference between the Company's
PV10 of $76.5 million and its standardized measure value of $70.1 million as
of December 31, 2012 is the effect of estimated income taxes.

About U.S. Energy Corp.

U.S. Energy Corp. is a natural resource exploration and development company
with a primary focus on the exploration and development of its oil and gas
assets.The Company also owns the Mount Emmons molybdenum deposit located in
west central Colorado.The Company is headquartered in Riverton, Wyoming and
trades on the NASDAQ Capital Market under the symbol "USEG".

To view the Company's Financial Statements and Management's Discussion and
Analysis, please see the Company's year-end 2012 10-K which is available at
www.sec.gov and www.usnrg.com.

The U.S. Energy Corp. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5043

                Disclosure Regarding Forward-Looking Statement

This news release includes statements which may constitute "forward-looking"
statements, usually containing the words "will," "anticipates," "believe,"
"estimate," "project," "expect," "target," "goal," or similar
expressions.Forward looking statements in this release relate to, among other
things, U.S. Energy's expected future production and capital expenditures and
projects, its drilling and fracing of wells with industry partners and
potential additional drilling opportunities, its ownership interests in those
wells, the oil and natural gas targets or goals for the wells, future capital
expenditures (including the availability of funds to make such expenditures)
and projects, future expenses, production, costs and sale transactions, and
activities relating to the Mount Emmons project.There is no assurance that
any of the wells referenced in this press release will be economic.Initial
and current production results from a well are not necessarily indicative of
its longer-term performance.Future transactions may not close on the terms we
anticipate or at all. Results from exploration and development activities
conducted on properties near properties in which the Company has an interest,
may not be indicative of the results the Company will generate from its
properties or the value of those properties.The forward-looking statements
are made pursuant to the safe harbor provision of the Private Securities
Litigation Reform Act of 1995.Forward-looking statements inherently involve
risks and uncertainties that could cause actual results to differ materially
from the forward-looking statements.Factors that would cause or contribute to
such differences include, but are not limited to, dry holes and other
unsuccessful development activities, higher than expected expenses or decline
rates from production wells, future trends in commodity and/or mineral prices,
the availability of capital, competitive factors, and other risks described in
the Company's filings with the SEC (including, without limitation, the Form
10-K for the year ended December 31, 2012) all of which descriptions are
incorporated herein by reference.By making these forward-looking statements,
the Company undertakes no obligation to update these statements for revision
or changes after the date of this release.

CONTACT: For further information, please contact:

         Reggie Larsen
         Director of Investor Relations
         U.S. Energy Corp.
         1-800-776-9271
         Reggie@usnrg.com

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