U.S. Energy to Participate in Upcoming Horizontal Drilling Program in Texas

U.S. Energy Corp. today announced it will participate in the upcoming horizontal drilling program on its existing acreage position targeting the development of the Georgetown formation in Zavala and Dimmit Counties, Texas. The development program will take place on acreage positions previously developed for shallower horizons. Operations are expected to begin in late October 2017 and the initial well will be drilled as a dual lateral.

Highlights

• U.S. Energy plans to participate in up to 6 horizontal wells on its existing acreage position.
• Company working interests range from approximately 6%-15% across the entire position.
• At current commodity prices, single well economics are expected to generate an approximate 60% internal rate of return, 2.5x cash on cash return and pay back in approximately one year.
• The operator of the initial two wells in the drilling program, CML Exploration, has identified multiple targets to develop and has recently been active and successful targeting the Georgetown formation.
• The expected gross drilling and completion cost for a single horizontal well is approximately $3.4 million.
• Drilling costs will be funded from cash flow from operations and existing cash on hand.
• Once completed, the program will generate a meaningful and immediate increase in Company reserves.

David Veltri, Chairman and CEO of U.S. Energy, stated, “We are pleased to announce our participation in the upcoming drilling program and excited for the future prospects of U.S. Energy as we continue our transition from being focused on restructuring the Company’s balance sheet to becoming a growth-oriented E&P Company. Our recently announced restructuring initiatives along with the completion of recent asset sales will allow us to re-deploy capital to focus on significant growth opportunities and position U.S. Energy to maximize returns for shareholders. This is the first newly drilled well that U.S. Energy has participated in since early 2015, and we look forward to evaluating and participating in other highly accretive development projects that are focused on capital returns and cash generation.”