U.S. Energy Corp. Completes Sale of Interest in Sutter Gold Mining Inc. to RMB Resources Ltd.

Friday, August 22nd 2008

U.S. Energy Corp. (Nasdaq:USE) (“USE” or the “Company”) today announced that it has completed the sale of an aggregate of 39,062,720 common shares of Sutter Gold Mining Inc. representing approximately 49.9% of the outstanding common shares of SGMI to RMB Resources Ltd. (“RMB”), as trustee for the Telluride Investment Trust, for an aggregate purchase price of approximately Cdn. $5.4 million, or Cdn. $0.138/share in accordance with the terms of a share purchase agreement (the “Purchase Agreement”) previously announced on June 13, 2008. Under the terms of the agreement, USE retained an equity position of approximately 3,550,361 shares and a Net Profits Royalty on the project.

In conjunction with the closing of the sale of the shares by USE to RMB, USE also participated in a non-brokered private placement by SGMI with the purchase of approximately 4,545,455 units at Cdn. $0.11 per unit for total cash consideration of Cdn. $500,000. USE also received 24-month warrants to purchase an additional 2,272,728 common shares of SGMI at a price of $0.15 per share as part of the private placement. All securities issued under the private placement will be subject to a four-month hold period.

Upon completion of both transactions USE will own approximately 8,095,816 shares of SGMI. USE also has retained a 5% Net Profits Royalty on the project, which will be reduced to a 1% Net Profits Royalty on the project after USE receives an additional US $4.6 million from production.

“With the sale of our controlling equity position in SGMI we continue to successfully execute our strategy to monetize non-core assets to support investment in other areas of our business,” stated Mark Larsen, President of U.S. Energy Corp. “In this instance, however, we have chosen to enhance our residual equity position by making an additional investment in SGMI’s private placement so we can participate to a greater extent in any future upside potential,” he added.

U.S. Energy Corp. is a diversified natural resource company with interests in molybdenum, oil and gas, gold, and real estate. While the Company primarily invests in the natural resource sector, it is also broadening its business interests to include cash flow generating investments driven by surging growth created by energy and mining activity in the intermountain west region of the United States. The Company is headquartered in Riverton, Wyoming, and its common stock is listed on The NASDAQ Capital Market under the symbol “USEG.” For more information on U.S. Energy Corp., visit its website at http://www.usnrg.com.