DENVER, Sept. 20, 2016 (GLOBE NEWSWIRE) -- U.S. Energy Corp. (NASDAQ:USEG), a Wyoming corporation (the “Company”),
has entered into an Earnings & Participation Agreement (the “Agreement”) on a previously announced project with IronHorse Resources
LLC, a Delaware limited liability company (“IronHorse”), pursuant to which the Company will earn interests in certain IronHorse
Farmout Agreements to participate in developing three core areas in the DJ Basin, Wattenberg Field, Weld County, Colorado.
Under the Agreement, the Company will obtain working interests averaging 11.6% in 21 horizontal wells to be drilled
in the A, B, and C benches of the Niobrara formation and the Codell formation.
The DJ Basin is a crude oil and liquids rich natural gas play located in Northeastern Colorado and Southeastern
Wyoming. The Company believes that the Wattenberg Field of the DJ Basin offers attractive economics at current strip prices
for oil and gas. The DJ Basin Wattenberg was discovered in 1970 and is one of the 15 largest developments of gas in the
country.
The development program is slated to begin later this year and drill into mid-2017. The Company’s commitment
will cost approximately $9.6 million for drilling and completing the wells, and is estimated to generate revenue of approximately
$4.9 million in each of the first two years of the program net to the Company, at projected 2017 prices of $47.00/BO and $2.78/MCF
and assuming future strip pricing and differentials. The Company estimates that the project could generate a 43% increase in
reserves at a finding and development cost of $12.18/ BOE, resulting in a ROR of 31% and a ROI of 2.4.
The transaction is a continuation of the transformation of the Company to solely focus on its ongoing oil and gas
business. The Company previously announced a restructuring of the Company by reducing its overhead costs and moving the
corporate headquarters to Denver, Colorado for better access to financial services and to improve access to oil and gas deal
flow.
David Veltri, CEO and President of the Company stated, “U.S. Energy Corp. is glad to have secured the development
projects for our shareholders and look forward to the drilling phase of the operation to begin before year end. The
experienced DJ Basin companies and seasoned individuals with IronHorse make this a great opportunity. We hope to grow our
position in the DJ Basin while leveraging this experience into an operated position in the future. We continue to look for
acquisitions of producing properties and drillable acreage positions, consolidating our current positions in the Bakken and Eagle
Ford trends in addition to divesting nonstrategic assets.”
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 is headquartered in Denver, Colorado and trades on the NASDAQ Capital
Market under the symbol “USEG”.
Disclosure Regarding Forward-Looking Statement
Safe Harbor for forward-looking statements: Statements in this release looking forward in time, including
statements regarding the proposed transaction and its expected benefits to the Company, involve known and unknown risks and
uncertainties, which may cause U.S. Energy Corp.’s actual results in future periods to be materially different from any future
performance suggested in this release. Such factors may include, but may not be limited to, a potential inability to enter
into definitive agreements relating to the transaction, close the transaction, finance future capital expenditures relating to the
properties and achieve the anticipated benefits of the transaction, changes in the prices received by the Company for oil and
natural gas, regulatory limitations on the Company’s operations, and other risk factors disclosed in the Company’s filings with the
Securities and Exchange Commission, which are incorporated herein by reference. The Company does not undertake to update any
forward-looking statement.
For further information, please contact: David Veltri CEO and President U.S. Energy Corp. 1-800-776-9271 david@usnrg.com
