DENVER, Aug. 22, 2018 (GLOBE NEWSWIRE) -- U.S. Energy Corp. (NASDAQCM: USEG) (“We” “U.S.
Energy” or the “Company”) today announced that it has entered into an exclusive non-binding Memorandum of Understanding to acquire
oil and natural gas producing properties targeting the Bakken formation of North Dakota.
Overview
The Company has entered into a Memorandum Of Understanding (the “MOU”) with APEG I Partners, a Texas partnership
(“APEG”), to acquire all of APEG’s interest in 67 wells concentrated in Williams and McKenzie Counties, North Dakota (the
“Transaction”). APEG is an affiliate of APEG Energy II, L.P., the Company’s largest stockholder. The Transaction will add highly
complementary assets to the Company’s existing portfolio in North Dakota, with similar operators and development potential. The
closing of the Transaction will result in the acquisition of approximately 1.1 MMBOE of proved developed reserves (79% oil) and 400
BOEPD of current production across 1,600 net acres. The Company expects the Transaction will create additional opportunities for
development and acreage swaps that would permit the Company to continue consolidating its leasehold position in the area.
The total consideration for the Transaction is approximately $17.8 million, consisting of a combination of cash,
issuance of common and preferred stock of the Company and the assumption of APEG’s outstanding commodity derivatives. Additionally,
the Company plans to establish a new $8.0 million revolving credit facility, for which the Company has received a non-binding term
sheet from a traditional reserved based lender. Subsequent to closing, the Company plans to continue reducing leverage through
positive cash flow from operations and potential strategic dispositions, using the proceeds to reduce borrowings under the new
credit facility. If completed, the Transaction will have an effective date of July 1, 2018.
The closing of the Transaction is conditioned on obtaining the required debt and equity financing, Nasdaq
approval and the approval of the stockholders of the Company at a special meeting to be scheduled for December 2018.
Management Comment
David Veltri, U.S. Energy’s Chief Executive Officer, stated, “This is an exciting transaction for U.S. Energy
that, upon closing, will approximately double the Company’s existing production base in a highly economic area in which we have
significant experience. We are pleased with the considerable progress U.S. Energy has made over the past year and the subsequent
improvement in nearly all operational and financial metrics. The recent market volatility characterized by exaggerated equity price
swings does not represent the existing status of the company; predictable production, steady revenues, and manageable costs
combined with a sustainable liquidity profile that enables the Company to handle any foreseeable capital requirements. While
management has been primarily focused over the past several quarters on the divestment of both legacy mining obligations and under
performing non-operated oil and gas assets, upon the closing of the Transaction, we would complete an initial step on our mission
to build shareholder value with the cooperation and support of our strategic partner, Angelus Private Equity Group (“Angelus”). In
conjunction with Angelus, U.S. Energy has successfully restructured the Company’s balance sheet while adding desirable oil assets
in a key area that we know well. These actions have set U.S. Energy on a stable path forward and have equipped the Company with the
ability to evaluate and acquire assets that will ultimately deliver enhanced shareholder returns.
U.S. Energy will remain focused on adding accretive assets that immediately increase the production, revenue and
cash flow of the Company. Additionally, through proactively enhancing, developing and drilling on existing Company assets, such as
our recent announcement regarding participation in continued drilling that will target the Georgetown formation in Zavala County,
TX, we can begin to pull forward value from legacy Company assets that have significant upside opportunity.”
About U.S. Energy Corp.
We are an independent energy company focused on the lease acquisition and development of oil and gas producing
properties in the continental United States. Our business is currently focused in the Williston Basin of North Dakota and South
Texas. We continue to focus on increasing production, reserves, and cash flow from operations while pro-actively managing our debt
levels. More information about U.S. Energy Corp. can be found at www.usnrg.com.
Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of the securities laws. All
statements other than statements of historical facts included herein may constitute forward-looking statements. Forward-looking
statements in this document may include statements regarding the Company’s expectations regarding the Company’s operational,
exploration and development plans; expectations regarding the nature and amount of the Company’s reserves; and expectations
regarding production, revenues, cash flows and recoveries. When used in this press release, the words "will," "potential,"
"believe," "estimate," "intend," "expect," "may," "should," "anticipate," "could," "plan," "predict," "project," "profile,"
"model," or their negatives, other similar expressions or the statements that include those words, are intended to identify
forward-looking statements, although not all forward-looking statements contain such identifying words. Such statements are subject
to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual
results to differ materially from those implied or expressed by the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, fluctuations in oil and natural gas prices, uncertainties inherent
in estimating quantities of oil and natural gas reserves and projecting future rates of production and timing of development
activities, competition, operating risks, acquisition risks, liquidity and capital requirements, the effects of governmental
regulation, adverse changes in the market for the Company’s oil and natural gas production, dependence upon third-party vendors,
and other risks detailed in the Company’s periodic report filings with the Securities and Exchange Commission.
Corporate Contact:
U.S. Energy Corp.
Ryan Smith
Chief Financial Officer
303-993-3200
www.usnrg.com
