U.S. Energy Corp. Provides Review of 2007 and Operations Update

U.S. Energy Corp. Provides Review of 2007 and Operations Update

U.S. Energy Corp., a diversified natural resource company with interests in molybdenum, oil and gas, gold, and real estate, today provided a review of 2007 results and an update on current operations for its primary business segments.

Review of 2007 Accomplishments

The year ended December 31, 2007 was the most profitable in U.S. Energy Corp.’s history, due primarily to the sale of the Company’s uranium assets to Uranium One Inc. for $111.7 million. The Company reported net income of $56.4 million, or $2.54 per diluted share, for the year, and U.S. Energy Corp. has the potential to receive future payments from Uranium One of up to $40 million, based upon the achievement of certain milestones.

At December 31, 2007, the Company had $72.3 million in cash and cash equivalents, a current ratio of 10-to-1, an accumulated surplus of $19.1 million, and outstanding debt of $5.7 million.

Notable Company accomplishments during 2007 included:

– The sale of most of the Company’s uranium assets for $111.7 million, which included the receipt of 6.6 million shares of Uranium One common stock, $14 million in cash payments and the release of cash bonds held for

reclamation obligations on the properties sold.

– The sale of the Uranium One shares for $90.7 million, along with the
sale of other marketable securities for $1.5 million.

– The sale of the Ticaboo, Utah town site to Uranium One Inc. for $2.7
million, resulting in a net profit of $472,300 on the transaction.

– The receipt of $2.8 million in interest income from cash and cash
equivalent investments.

– Finalization of an exploration, development and mine operating agreement with Kobex Resources Ltd. for the “Lucky Jack” molybdenum property in west-central Colorado. As of December 31, 2007, Kobex had expended a total of $7.7 million on the property for initial acquisition

payments to U.S. Energy Corp., operations, engineering and permitting work.

– The acquisition of all minority shareholder interests in Crested Corp. through the issuance of approximately 2.9 million shares of U.S. Energy Corp. common stock on a one-for-two basis, along with the liquidation

and/or dissolution of all subsidiary companies other than Sutter Gold.

– Payment of a $0.10 per share dividend to all U.S. Energy Corp.
shareholders of record on July 6, 2007.

– The repurchase of 228,000 shares of U.S. Energy Corp. common stock, under the terms of a previously approved stock buyback plan, at an average

price of $4.59 per share.

– Following the receipt of an $18.5 million construction loan, the commencement of construction of a $26 million, 216-unit multi-family

housing complex in Gillette, Wyoming.

– The purchase of a 20% working interest in prospective oil and gas
properties in the Gulf Coast region of the U.S. for $2.9 million.

Operations Review


U.S. Energy Corp. and its partner, Kobex Resources Ltd., continue to make progress towards the completion of a Plan of Operations and the ultimate development of a world-class molybdenum mine at the Lucky Jack project in west-central Colorado. Consultants have been working on geotechnical aspects of the Plan of Operations, along with hydrology, rock mechanics, mine planning, facilities requirements, transportation, socio-economic factors and minerals evaluation. The Company’s current schedule anticipates the submission of a formal Plan of Operations to the U.S. Forest Service before the end of the third quarter of 2008.

Last month, the State of Colorado approved Kobex’s plan for an amended work program for delineation drilling at the deposit, including the construction of a new access drift that bypasses the old workings of the historic Keystone mine. This program has been submitted to Gunnison Country for its review, and the program should be completed by the middle of 2009.

The Company also recently announced that metallurgical tests on historical core and reject samples have concluded that the mining process will not require the use of cyanide and that, by removing pyrite from the ore, tailings can be produced that do not generate acid. These are important milestones for the project and are consistent with U.S. Energy Corp.’s commitment to the development of a mine with minimal impact upon the environment.

U.S. Energy Corp. has also been engaged locally and nationally in legislative initiatives regarding hard rock mining. The Company and its representatives have attended several meetings with key Senators and staffers in Washington, D.C. relating to the mining reform legislation currently before Congress. The key points that are being debated involve a new royalty on hard rock mining on public lands, which would not affect the Lucky Jack project due to the patents that have been issued. Going forward, the elimination of “patenting” is a concept that U.S. Energy Corp. supports, along with the funding for clean-up of abandoned mine sites. These positions are also supported by the National Mining Association and the Northwest Mining Association.

Oil and Gas

U.S. Energy Corp.’s partners plan to drill up to three wells in the Gulf Coast region of the U.S. beginning this summer. This represents a several-month delay relative to original expectations, due to further study, permitting and rig availability issues. U.S. Energy Corp. has a 20 percent working interest in the venture.

To date, the Company has invested approximately $3 million in the project and expects to spend an additional $4.5 million on drilling activities later this year. If the initial drilling program is successful, the project could expand to include a number of additional wells during the next several years.

In order to pursue other opportunities with time horizons that are shorter than those of the Company’s Lucky Jack molybdenum project, U.S. Energy Corp. is evaluating additional oil and gas ventures with successful and motivated partners who have the resources to explore and develop properties with above-average potential.


Management continues its work to identify either a joint venture partner or other opportunities to enhance the value of the advanced-stage Sutter Gold Mine.

Other Natural Resource Opportunities

Consistent with the Company’s effort to identify new ways to enhance shareholder value, management has continued to review various mineral prospects. To date, no meaningful projects have been pursued beyond the initial due diligence stage. However, with the recent tightening of credit on a global scale, the Company is beginning to see a greater number of opportunities that are available on reasonable terms. This appears to be particularly evident in the uranium sector, where company valuations and stock prices have been under pressure lately. Management will continue to seek investment opportunities in the minerals sector, with a focus upon North American projects.

U.S. Energy Corp. is also reviewing opportunities in the alternative energy sector, including wind and solar power. While the Company has yet to identify an opportunity that adequately rewards shareholders while generating environmentally clean energy, a number of projects are currently under evaluation.

Real Estate

Based on the long lead times required to permit and otherwise develop its mining projects, U.S. Energy Corp. has allocated a portion of its capital to recurring-revenue opportunities in real estate. The Company is currently focused on the Intermountain West, where high commodity prices have increased the demand for workers in the mining and energy industries. Construction of the Company’s first multi-family project, the Remington Village Apartment complex in Gillette, Wyoming, is now approximately 60% complete, on time and on budget. Residents have already committed to 172 of the 216 units, and 48 units (two of the nine planned buildings) are already occupied. The City of Gillette has provided occupancy permits as the buildings are completed, because of the extreme housing shortage in the area. At full occupancy, cash flow after debt service from the Remington complex should approximate $500,000 annually.

The Company, in pursuing additional real estate opportunities, will continue to seek out sustained growth areas in the Intermountain West where housing is in short supply due to energy and mining activities. Its goal is to establish recurring revenues and cash flows during the years leading up to the receipt of permits to begin mining operations at the Lucky Jack molybdenum project.

Investor Relations

In order to expand interest in U.S. Energy Corp. within the investment community, the Company has approved a more active investor relations program for 2008. To date this year, management has attended or participated in mining industry shows in Vancouver and Toronto, and investor road shows are scheduled for New York, Chicago, Dallas, Denver, London and Germany in the coming months.

About U.S. Energy Corp.

U.S. Energy Corp. is a diversified natural resource company with interests in molybdenum, oil and gas, gold, and real estate. As a transitional owner of assets, U.S. Energy Corp. acquires properties on favorable terms, adds value through the application of its expertise, and exits the investment through a joint venture or sale to a strategic buyer. While the Company’s primary business emphasis is on the natural resources sector, it is also broadening its 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.”

Disclosure Regarding Mineral Resources Under SEC and Canadian Regulations; and Forward-Looking Statements

The Company owns or may come to own stock in companies which are traded on foreign exchanges, and may have agreements with some of these companies to acquire and/or develop the Company’s mineral properties. Examples of these other companies are Sutter Gold Mining Inc. and Kobex Resources Ltd. These other companies are subject to the reporting requirements of other jurisdictions.

United States residents are cautioned that some of the information available about our mineral properties, which is reported by the other companies in foreign jurisdictions, may be materially different from what the Company is permitted to disclose in the United States.

This news release includes statements which may constitute “forward-looking” statements, usually containing the words “believe,” “estimate,” “project,” “expect,” or similar expressions. These 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, future trends in mineral prices, the availability of capital, competitive factors, and other risks. 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.

For further information on the differences between the reporting limitations of the United States, compared to reports filed in foreign jurisdictions, and also concerning forward-looking statements, please see the Company’s Form 10-K (“Disclosure Regarding Forward-Looking Statements”; “Disclosure Regarding Mineral Resources under SEC and Canadian Regulation”; and “Risk Factors”); and similar disclosures in the Company’s Forms 10-Q.


For further information, please contact: Keith G. Larsen CEO or Mark J. Larsen President U.S. Energy Corp.

(307) 856-9271

877 North 8th West Riverton, WY 82501 USA Ph: (307)856-9271

Fx: (307)857-3050


Source: U.S. Energy Corp.

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