RIVERTON, Wyo., April 1, 2009 (GLOBE NEWSWIRE) -- U.S. Energy Corp. (Nasdaq:USEG) ("USE" or the "Company"), a natural resources exploration and development company with interests in molybdenum, oil and gas, geothermal, and real estate assets, today announced that it has entered into a Participation Agreement with Houston, Texas-based Houston Energy L.P. ("HE") to acquire a 10% working interest in an oil and gas prospect located in Southeast Texas. HE will be the operator of the contract area and is a privately held, independent oil and gas company exploring the Offshore Gulf of Mexico, South Louisiana, Texas Gulf Coast, West Texas, and Southeastern New Mexico.
Under the terms of the agreement, U.S. Energy will pay sunk land costs and a prospect fee of approximately $29,000 and will be responsible for 10% of the costs to drill an initial test well (ITW) to earn an 8.5% after casing point (ACP) working interest (6.2% net revenue interest). There is a 10% after prospect payout (APO) back-in working interest due the operator, which would reduce U.S. Energy's APO working interest to 7.65% (5.6% net revenue interest). The initial commitment under the agreement is approximately $260,000, including the prospect fee, to the casing point. Spudding of the well is expected to take place in April 2009 with an initial planned drilling depth of approximately 11,000 feet. If the ITW is deemed productive, additional prospects have also been identified, and will be evaluated on a going forward basis.
"Collaborating with groups like Houston Energy allows us to leverage their high level of technical and regional expertise and we will continue to evaluate additional opportunities to acquire non-operating working interests in the Gulf Coast and other known producing regions," stated Keith Larsen, CEO of U.S. Energy Corp. "The Gulf Coast region remains an area of focus for us as we look to increase our reserves and production rates through the balance of the year and beyond," he added.
Note Regarding Mcfe
In this press release, Mcfes are derived by converting oil to gas in the ratio of one barrel of oil to six thousand cubic feet of gas (1 bbl:6 Mcf). One thousand cubic feet of gas equivalent ("Mcfe") amounts may be misleading, particularly if used in isolation. A Mcfe conversion ratio of 1 bbl of oil to 6 Mcf of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value of equivalency at the well head.
About U.S. Energy Corp.
U.S. Energy Corp. is a diversified natural resource company with interests in molybdenum, oil and gas, geothermal and real estate assets. The Company is headquartered in Riverton, Wyoming, and its common stock is listed on The NASDAQ Capital Market under the symbol "USEG".
The U.S. Energy Corp. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5043
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. An example is Sutter Gold Mining Inc. 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.