U.S. Energy Corp. (NASDAQ:USEG) Q3 2022 Earnings Conference Call November 11, 2022 8:30 AM ET Company Participants Ryan Smith - Chief Executive Officer Conference Call Participants Charles Meade - Johnson Rice Ignacio Bernaldez - EF Hutton Operator Ladies and gentlemen, greetings and welcome to the U.S. Energy Corporation Third Quarter 2022 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, James Master [ph]. Pleas ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2022 For the transition period from _____________ to _____________________ Commission File Number 000-06814 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (Exact Name of Registrant as Specified in its Charter) | Delaware | 83-0205516 | | ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________________ Commission File Number 000-06814 Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an eme ...

FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2022 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________________ Commission File Number 000-06814 (Exact Name of Registrant as Specified in its Charter) | Wyoming | 83-0205516 | | --- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to _______________ Commission File Number 000-06814 US ENERGY CORP. (Exact Name of Company as Specified in its Charter) Wyoming 83-0205516 (State or ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 000-06814 (Exact Name of Registrant as Specified in its Charter) | Wyoming | | 83-0205516 | | --- | --- | --- | | (State or othe ...

FORM 10-Q Filing Information [Registrant Information](index=1&type=section&id=Registrant%20Information) U.S. Energy Corp.'s Q2 2021 report details its Wyoming registration, Houston headquarters, and non-accelerated filer status - U.S. Energy Corp. is a Wyoming-registered company headquartered in Houston, Texas[4](index=4&type=chunk) - The company is designated as a non-accelerated filer and a smaller reporting company[5](index=5&type=chunk) - As of August 10, 2021, the company had **4,676,301** shares of common stock outstanding[6](index=6&type=chunk) Cautionary Note About Forward-Looking Statements [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This report includes forward-looking statements on future operations and financial conditions, subject to risks and uncertainties - Forward-looking statements cover the company's future operations, financial condition, prospects, and business strategies[11](index=11&type=chunk) - These statements are based on current expectations and assumptions, subject to risks and uncertainties that may cause actual results to differ materially from expectations[11](index=11&type=chunk) - The company undertakes no obligation to revise or publicly release any revisions, unless required by law[13](index=13&type=chunk) - Examples of forward-looking statements include planned oil and gas exploration capital expenditures, potential drilling locations, cash flow forecasts, changes in oil and gas production, acquisition opportunities, and the impact of the COVID-19 pandemic[12](index=12&type=chunk) Part I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements and notes for Q2 and H1 2021 [Condensed Consolidated Balance Sheets (unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) Condensed Consolidated Balance Sheet Key Data (as of June 30, 2021 vs December 31, 2020) | Metric (thousand USD) | June 30, 2021 | December 31, 2020 | Change (thousand USD) | Change Rate | | :-------------------- | :------------ | :---------------- | :-------------------- | :---------- | | **Assets** | | | | | | Cash and Equivalents | 6,582 | 2,854 | 3,728 | 130.69% | | Total Current Assets | 8,985 | 4,708 | 4,277 | 90.84% | | Net Oil and Gas Properties | 8,388 | 7,438 | 950 | 12.77% | | Total Assets | 17,627 | 12,363 | 5,264 | 42.58% | | **Liabilities** | | | | | | Total Current Liabilities | 1,569 | 2,209 | (640) | -28.97% | | Total Non-Current Liabilities | 1,576 | 1,587 | (11) | -0.69% | | Total Liabilities | 3,145 | 3,796 | (651) | -17.15% | | **Shareholders' Equity** | | | | | | Total Shareholders' Equity | 14,482 | 8,567 | 5,915 | 69.04% | - As of June 30, 2021, the company's cash and equivalents significantly increased by **130.69%** to **$6,582 thousand**, primarily due to common stock issuance[16](index=16&type=chunk) - Total assets grew by **42.58%** to **$17,627 thousand**, while total liabilities decreased by **17.15%** to **$3,145 thousand**, indicating an improved financial position[16](index=16&type=chunk) [Condensed Consolidated Statements of Operations (unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(unaudited)) Condensed Consolidated Statements of Operations Key Data (for the Three and Six Months Ended June 30, 2021) | Metric (thousand USD) | 2021 Q2 | 2020 Q2 | Change (QoQ) | Change Rate (QoQ) | 2021 H1 | 2020 H1 | Change (YoY) | Change Rate (YoY) | | :-------------------- | :------ | :------ | :----------- | :---------------- | :------ | :------ | :----------- | :---------------- | | **Revenue** | | | | | | | | | | Oil | 1,507 | 201 | 1,306 | 650.00% | 2,639 | 1,056 | 1,583 | 150.00% | | Natural Gas and Liquids | 149 | (12) | 161 | N/A | 228 | 56 | 172 | 307.14% | | **Total Revenue** | 1,656 | 189 | 1,467 | 775.93% | 2,867 | 1,112 | 1,755 | 157.82% | | **Operating Expenses** | | | | | | | | | | Lease Operating Expenses | 477 | 333 | 144 | 43.24% | 1,045 | 742 | 303 | 40.84% | | Production Taxes | 131 | 13 | 118 | 907.69% | 210 | 80 | 130 | 162.50% | | Depreciation, Depletion, Amortization & Impairment | 146 | 99 | 47 | 47.47% | 264 | 210 | 54 | 25.71% | | Impairment of Oil and Gas Properties | - | 1,794 | (1,794) | -100.00% | - | 1,794 | (1,794) | -100.00% | | General and Administrative Expenses | 812 | 367 | 445 | 121.25% | 1,547 | 939 | 608 | 64.75% | | **Total Operating Expenses** | 1,566 | 2,606 | (1,040) | -39.91% | 3,066 | 3,765 | (699) | -18.57% | | **Operating Income (Loss)** | 90 | (2,417) | 2,507 | N/A | (199) | (2,653) | 2,454 | N/A | | **Other Income (Expense)** | | | | | | | | | | Loss on Derivatives | (317) | - | (317) | N/A | (210) | - | (210) | N/A | | **Net Loss** | (207) | (3,651) | 3,444 | -94.33% | (369) | (3,957) | 3,588 | -90.67% | | **Basic and Diluted Loss Per Share** | (0.04) | (2.68) | 2.64 | -98.51% | (0.09) | (3.01) | 2.92 | -96.99% | - Total revenue for Q2 2021 increased by **775.93%** year-over-year to **$1,656 thousand**, driven primarily by higher oil prices and increased production[19](index=19&type=chunk) - Net loss for H1 2021 significantly narrowed by **90.67%** to **$369 thousand**, mainly due to reduced oil and gas asset impairment and revenue growth[19](index=19&type=chunk) [Condensed Consolidated Statements of Changes in Shareholders' Equity (unaudited)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity%20(unaudited)) Condensed Consolidated Statements of Changes in Shareholders' Equity Key Data (for the Six Months Ended June 30, 2021) | Metric (thousand USD) | June 30, 2021 | December 31, 2020 | Change (thousand USD) | Change Rate | | :-------------------- | :------------ | :---------------- | :-------------------- | :---------- | | Common Stock Shares | 4,676,301 | 3,317,893 | 1,358,408 | 40.94% | | Common Stock Amount | 47 | 33 | 14 | 42.42% | | Additional Paid-in Capital | 148,922 | 142,652 | 6,270 | 4.40% | | Accumulated Deficit | (134,487) | (134,118) | (369) | 0.27% | | Total Shareholders' Equity | 14,482 | 8,567 | 5,915 | 69.04% | - As of June 30, 2021, total shareholders' equity increased to **$14,482 thousand**, a **69.04%** rise from year-end 2020, primarily due to common stock issuance and related capital increases[21](index=21&type=chunk) - Common stock shares increased by **40.94%**, mainly due to an underwritten offering, conversion of related-party secured notes, and settlement of legal fees[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows (unaudited)](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) Condensed Consolidated Statements of Cash Flows Key Data (for the Six Months Ended June 30, 2021) | Cash Flow Type (thousand USD) | 2021 H1 | 2020 H1 | Change (thousand USD) | Change Rate | | :---------------------------- | :------ | :------ | :-------------------- | :---------- | | Operating Activities Cash Flow | (591) | (470) | (121) | 25.74% | | Investing Activities Cash Flow | (877) | (133) | (744) | 559.40% | | Financing Activities Cash Flow | 5,196 | (152) | 5,348 | N/A | | Net Increase (Decrease) in Cash and Equivalents | 3,728 | (755) | 4,483 | N/A | | Cash and Equivalents, End of Period | 6,582 | 777 | 5,805 | 747.10% | - In H1 2021, financing activities provided **$5,196 thousand** in cash, primarily from common stock issuance, reversing the cash outflow seen in the prior year period[22](index=22&type=chunk) - Cash outflow from investing activities significantly increased to **$877 thousand**, mainly for oil and gas capital expenditures, particularly for reactivating idle wells in the Liberty County field[22](index=22&type=chunk) - Cash and equivalents at period-end increased to **$6,582 thousand**, a significant rise from **$2,854 thousand** at year-end 2020[22](index=22&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. ORGANIZATION, OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES](index=12&type=section&id=1.%20ORGANIZATION,%20OPERATIONS%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) U.S. Energy Corp. acquires and develops US oil and gas assets, preparing GAAP financial statements with management estimates - U.S. Energy Corp., founded in 1966, focuses on acquiring, exploring, and developing oil and gas assets in the United States[24](index=24&type=chunk) - Financial statement preparation involves significant estimates and assumptions regarding oil and gas reserves, commodity prices, and warrant valuations, which may be materially affected by market changes[27](index=27&type=chunk) - The company does not designate commodity derivative contracts as cash flow hedges, with fair value changes recognized directly in the statements of operations[28](index=28&type=chunk) [2. ACQUISITIONS](index=13&type=section&id=2.%20ACQUISITIONS) In 2020, the company acquired multiple oil and gas assets, significantly expanding its operational footprint and interests - On March 1, 2020, the company acquired New Horizon Resources, gaining operating producing assets in North Dakota, including **9** gross wells (**5** net wells) and approximately **1,300** net acres[31](index=31&type=chunk) New Horizon Resources Acquisition Consideration and Net Assets (thousand USD) | Item | Amount (thousand USD) | | :-------------------- | :-------------------- | | Cash Consideration | 150 | | Common Stock Issued (59,498 shares) | 240 | | Less: Cash Acquired | (28) | | **Total Consideration** | **362** | | Net Assets Acquired | 362 | - On September 25, 2020, the company acquired FieldPoint Petroleum's oil and gas assets in New Mexico and Wyoming for a total consideration of **$597 thousand**, primarily mature proved developed producing reserves[33](index=33&type=chunk) - On December 1, 2020, the company acquired Liberty County Properties, gaining operating producing assets in Texas, including **41** wells and approximately **680** net acres, for **$326 thousand**[35](index=35&type=chunk) [3. REAL ESTATE HELD FOR SALE](index=15&type=section&id=3.%20REAL%20ESTATE%20HELD%20FOR%20SALE) The company plans to sell its Riverton, Wyoming property, recognizing a **$1,054 thousand** reclassification loss in 2020 - The company plans to sell its office building and land in Riverton, Wyoming, with the transaction expected to close in 2021[36](index=36&type=chunk) - In 2020, the company recognized a **$1,054 thousand** loss due to reclassifying the property as held for sale[36](index=36&type=chunk) Estimated Fair Value of Real Estate Held for Sale (thousand USD) | Item | Amount (thousand USD) | | :-------------------- | :-------------------- | | Estimated Selling Price of Building and Land | 800 | | Estimated Selling Price of Additional Land | 275 | | Estimated Costs to Sell | (100) | | **Estimated Net Proceeds** | **975** | [4. REVENUE RECOGNITION](index=16&type=section&id=4.%20REVENUE%20RECOGNITION) The company recognizes oil and gas sales revenue upon control transfer, with operating revenue significantly increasing to **32%** of total revenue in H1 2021 - The company's revenue primarily derives from oil and gas sales, with non-operator revenues and expenses recorded based on operator-provided information[38](index=38&type=chunk) - Following the acquisition of operating assets in 2020, the company directly sells oil and gas, recognizing revenue when control transfers to the buyer[40](index=40&type=chunk) Operating Revenue as a Percentage of Total Revenue | Period | Operating Revenue as % of Total Revenue | | :-------------------- | :-------------------------- | | 2021 Q2 | 32% | | 2020 Q2 | 14% | | 2021 H1 | 32% | | 2020 H1 | 3% | Oil and Gas Revenue by State (thousand USD) | State | 2021 Q2 | 2020 Q2 | 2021 H1 | 2020 H1 | | :-------------------- | :------ | :------ | :------ | :------ | | North Dakota | 766 | 125 | 1,369 | 663 | | Texas | 695 | 64 | 1,216 | 449 | | New Mexico | 98 | - | 212 | - | | Other | 97 | - | 70 | - | | **Total Revenue** | **1,656** | **189** | **2,867** | **1,112** | [5. LEASES](index=17&type=section&id=5.%20LEASES) The company added **$82 thousand** in right-of-use assets and lease liabilities in H1 2021 for a new Houston office - In H1 2021, the company added **$82 thousand** in right-of-use assets and operating lease liabilities due to a new Houston office lease agreement[46](index=46&type=chunk) Lease Assets and Liabilities Balances (thousand USD) | Item | June 30, 2021 | December 31, 2020 | | :-------------------- | :------------ | :---------------- | | Right-of-Use Assets (Operating Leases) | 167 | 127 | | Short-Term Operating Lease Liabilities | 107 | 65 | | Long-Term Operating Lease Liabilities | 78 | 78 | | **Total Lease Liabilities** | **185** | **143** | Lease Costs (thousand USD) | Item | 2021 Q2 | 2020 Q2 | 2021 H1 | 2020 H1 | | :-------------------- | :------ | :------ | :------ | :------ | | Operating Lease Costs | 17 | 27 | 51 | 34 | | Short-Term Lease Costs | 6 | 12 | 18 | 10 | | Sublease Income | (11) | (16) | (32) | (16) | | **Total Lease Costs** | **12** | **23** | **37** | **28** | - As of June 30, 2021, the weighted-average lease term was **1.7 years**, and the weighted-average discount rate was **9.26%**[49](index=49&type=chunk) [6. OIL AND NATURAL GAS PRODUCTION ACTIVITIES](index=20&type=section&id=6.%20OIL%20AND%20NATURAL%20GAS%20PRODUCTION%20ACTIVITIES) The company sold undeveloped land for **$30 thousand** in H1 2021 and recorded no oil and gas asset impairment, unlike **$1.8 million** in H1 2020 - In H1 2021, the company sold undeveloped land in Texas, generating **$30 thousand**[52](index=52&type=chunk) - No oil and gas asset impairment was recorded in H1 2021, compared to **$1.8 million** in H1 2020[53](index=53&type=chunk) - The ceiling test used an oil price of **$49.78 per barrel**, a natural gas price of **$2.43 per MMBtu**, and a **10%** discount rate[53](index=53&type=chunk) [7. DEBT](index=20&type=section&id=7.%20DEBT) In March 2021, the company converted **$375 thousand** in related-party secured notes and interest into **97,962** common shares - On March 4, 2021, the company converted **$375 thousand** of related-party secured notes and accrued interest into **97,962** shares of common stock, valued at **$438 thousand**[54](index=54&type=chunk) - This debt conversion resulted in **$25.5 thousand** in interest expense[54](index=54&type=chunk) [8. COMMODITY DERIVATIVE](index=20&type=section&id=8.%20COMMODITY%20DERIVATIVE) The company recorded **$317 thousand** and **$210 thousand** in commodity derivative losses in Q2 and H1 2021, respectively, due to rising oil prices - The company entered into a fixed-price swap commodity derivative contract to hedge **100 barrels** of crude oil per day from March 1 to December 31, 2021, at **$61.90 per barrel**[55](index=55&type=chunk) - This contract is not designated as a cash flow hedge, and its fair value changes are recognized in the statements of operations[55](index=55&type=chunk) Commodity Derivative Losses (thousand USD) | Item | 2021 Q2 | 2020 Q2 | 2021 H1 | 2020 H1 | | :-------------------- | :------ | :------ | :------ | :------ | | Settlements | (38) | - | (40) | - | | Change in Fair Value of Unsettled Derivatives | (279) | - | (170) | - | | **Total Commodity Derivative Losses** | **(317)** | **-** | **(210)** | **-** | - Losses primarily resulted from the decrease in the fair value of the fixed-price swap contract due to rising crude oil prices[55](index=55&type=chunk) [9. COMMITMENTS, CONTINGENCIES AND RELATED-PARTY TRANSACTIONS](index=21&type=section&id=9.%20COMMITMENTS,%20CONTINGENCIES%20AND%20RELATED-PARTY%20TRANSACTIONS) The company faces an employment claim arbitration from its former CEO and settled a lawsuit with APEG II by issuing common stock for legal fees - The company is facing an employment claim arbitration from former CEO David Veltri, incurring **$117 thousand** in defense costs[57](index=57&type=chunk) - A lawsuit with APEG II was settled in 2020, with the company issuing **90,846** common shares (valued at **$406 thousand**) to APEG on March 4, 2021, to reimburse legal fees[58](index=58&type=chunk) [10. PREFERRED STOCK](index=21&type=section&id=10.%20PREFERRED%20STOCK) The company redeemed all **50,000** Series A convertible preferred shares for **$3.2 million** by December 31, 2020 - The company's certificate of incorporation authorizes the issuance of up to **100,000** shares of preferred stock[59](index=59&type=chunk) - As of December 31, 2020, the company redeemed all **50,000** issued Series A convertible preferred shares for a total redemption price of **$3.2 million** (**$2.0 million** cash + **328,000** common shares)[60](index=60&type=chunk) - These preferred shares were originally issued in 2016 in connection with the disposition of the company's mining operations and carried a **12.25%** annual quarterly dividend[61](index=61&type=chunk) [11. SHAREHOLDERS' EQUITY](index=22&type=section&id=11.%20SHAREHOLDERS'%20EQUITY) As of June 30, 2021, the company had **4,676,301** common shares outstanding, with **$5.3 million** net proceeds from a February 2021 offering - As of June 30, 2021, the company had **4,676,301** shares of common stock outstanding[62](index=62&type=chunk) - On February 17, 2021, the company sold **1,131,600** shares of common stock through an underwritten offering, generating **$5.3 million** in net proceeds[62](index=62&type=chunk) Warrant Information (as of June 30, 2021 vs December 31, 2020) | Item | June 30, 2021 | December 31, 2020 | | :-------------------- | :------------ | :---------------- | | Remaining Warrants Outstanding | 50,000 | 50,000 | | Fair Value (thousand USD) | 119 | 95 | | Exercise Price | $3.92 | $3.92 | - As of June 30, 2021, unrecognized restricted stock compensation cost was **$650 thousand**, expected to be amortized over **2.6 years**[68](index=68&type=chunk) [12. ASSET RETIREMENT OBLIGATIONS](index=23&type=section&id=12.%20ASSET%20RETIREMENT%20OBLIGATIONS) The company records asset retirement obligations (AROs) for future plugging and abandonment of proved assets, valued using various assumptions - The company has asset retirement obligations (AROs) for the future plugging and abandonment of proved assets[69](index=69&type=chunk) Asset Retirement Obligations Changes (thousand USD) | Item | June 30, 2021 | December 31, 2020 | | :-------------------- | :------------ | :---------------- | | Beginning Balance | 1,408 | 819 | | Accretion | 40 | 43 | | Acquisitions | 44 | 558 | | **Ending Balance** | **1,492** | **1,408** | - ARO fair value calculations involve assumptions and judgments on ultimate abandonment costs, inflation, credit-adjusted risk-free discount rates, timing, and legal, regulatory, environmental, and political changes[70](index=70&type=chunk) [13. INCOME TAXES](index=23&type=section&id=13.%20INCOME%20TAXES) The company maintained a full valuation allowance against all deferred tax assets, resulting in a **0%** effective tax rate for H1 2021 and 2020 - The company's estimated effective tax rate was **0%** for H1 2021 and 2020[73](index=73&type=chunk) - The company maintains a full valuation allowance against all deferred tax assets (DTAs), thus no DTAs were recorded as of June 30, 2021[74](index=74&type=chunk) - The company is evaluating if recent common stock issuance triggered Section 382 loss limitations, but currently, there is no impact on the statements of operations due to the valuation allowance[75](index=75&type=chunk) [14. LOSS PER SHARE](index=25&type=section&id=14.%20LOSS%20PER%20SHARE) Basic and diluted net loss per share are identical due to net losses, making all potential dilutive securities anti-dilutive Basic and Diluted Loss Per Share (for the Three and Six Months Ended June 30, 2021) | Metric | 2021 Q2 | 2020 Q2 | 2021 H1 | 2020 H1 | | :-------------------- | :------ | :------ | :------ | :------ | | Loss Attributable to Common Stockholders (thousand USD) | (207) | (3,754) | (369) | (4,160) | | Basic Weighted-Average Common Shares (thousand shares) | 4,676 | 1,399 | 4,305 | 1,380 | | Dilutive Effect | - | - | - | - | | Diluted Weighted-Average Common Shares (thousand shares) | 4,676 | 1,399 | 4,305 | 1,380 | | **Basic Loss Per Share** | **(0.04)** | **(2.68)** | **(0.09)** | **(3.01)** | | **Diluted Loss Per Share** | **(0.04)** | **(2.68)** | **(0.09)** | **(3.01)** | - Due to net losses during the reporting periods, all potentially dilutive securities (such as stock options, restricted stock, and warrants) are considered anti-dilutive, resulting in identical basic and diluted loss per share[77](index=77&type=chunk) [15. FAIR VALUE MEASUREMENTS](index=26&type=section&id=15.%20FAIR%20VALUE%20MEASUREMENTS) The company measures financial instruments using a three-level fair value hierarchy, with warrants, equity securities, and derivatives valued accordingly - Fair value measurements are categorized into three levels: Level 1 (active market quotes), Level 2 (observable inputs), and Level 3 (unobservable inputs)[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk) - Warrants are classified as Level 3 liabilities, valued using the Black-Scholes model, with a fair value of **$119 thousand** as of June 30, 2021[82](index=82&type=chunk)[92](index=92&type=chunk) - Tradable equity securities (Anfield Energy) are classified as Level 1 based on active market quotes, with a fair value of **$254 thousand** as of June 30, 2021[84](index=84&type=chunk)[85](index=85&type=chunk)[92](index=92&type=chunk) - Commodity derivative contracts (fixed-price swaps) are classified as Level 2 using income valuation techniques, with a fair value of **$170 thousand** as of June 30, 2021[87](index=87&type=chunk)[92](index=92&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the company's financial condition, operating results, and cash flows, including its shift to an operating model and COVID-19 impacts [General Overview](index=31&type=section&id=General%20Overview) U.S. Energy Corp. acquires and develops US oil and gas assets, transitioning from a non-operator to a partial operating model - U.S. Energy Corp., founded in 1966, is an independent energy company focused on acquiring and developing oil and gas producing assets in the continental United States[100](index=100&type=chunk) - The company's operations are primarily concentrated in South Texas, North Dakota's Williston Basin, Lea County, New Mexico, and Converse County, Wyoming[100](index=100&type=chunk) - The company has transitioned from a historical non-operator model to a partial operating model, beginning to operate a small portion of its producing assets through 2020 acquisitions[101](index=101&type=chunk) [Plan of Operations and Strategy](index=31&type=section&id=Plan%20of%20Operations%20and%20Strategy) The company plans to pursue additional oil and gas opportunities, including acquisitions and reactivating idle wells, while strategically deploying capital - The company plans to pursue additional oil and gas industry opportunities in 2021 and beyond, including asset acquisitions, exploration and development partnerships, company acquisitions, and purchasing producing assets[102](index=102&type=chunk) - The company plans to increase production by performing workover operations on idle wells acquired in 2020 to bring them back online[102](index=102&type=chunk) - Key strategic elements include conservative and strategic capital deployment to maintain liquidity, and continuous evaluation and pursuit of value-enhancing transactions[104](index=104&type=chunk) [Recent Developments](index=31&type=section&id=Recent%20Developments) COVID-19 significantly impacted oil demand and prices in 2020, with future financial performance and accounting estimates still potentially affected - The COVID-19 pandemic caused a significant decline in crude oil demand and prices in 2020, negatively impacting the company's operating results and cash flows[103](index=103&type=chunk) - Although recent demand and commodity prices have recovered to pre-pandemic levels, future financial performance may still be affected by the ongoing pandemic[104](index=104&type=chunk) - Pandemic uncertainties affect management's accounting estimates and assumptions, potentially leading to greater volatility in areas like investments, receivables, and forward-looking guidance[104](index=104&type=chunk) [Critical Accounting Policies and Estimates](index=32&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Financial statement preparation requires management estimates, and the company's crude oil derivative swap contract is not designated for hedge accounting - Financial statement preparation requires management to make assumptions and estimates affecting reported amounts of assets, liabilities, revenues, and expenses, with actual results potentially differing[105](index=105&type=chunk) - In H1 2021, the company entered into a crude oil derivative swap contract to manage price volatility, but it is not designated as a cash flow hedge, with fair value changes recognized in the statements of operations[106](index=106&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) The company's net loss significantly narrowed in Q2 and H1 2021 due to substantial oil and gas revenue growth and reduced impairment [Comparison of our Statements of Operations for the Three Months Ended June 30, 2021 and 2020](index=32&type=section&id=Comparison%20of%20our%20Statements%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030,%202021%20and%202020) 2021 Q2 vs 2020 Q2 Revenue, Production, and Average Sales Price | Metric | 2021 Q2 | 2020 Q2 | Change | Change Rate | | :-------------------- | :------ | :------ | :----- | :---------- | | **Revenue (thousand USD)** | | | | | | Oil | 1,507 | 201 | 1,306 | 650% | | Natural Gas | 149 | (12) | 161 | N/A | | **Total Revenue** | **1,656** | **189** | **1,467** | **776%** | | **Production** | | | | | | Oil (barrels) | 24,077 | 11,710 | 12,367 | 106% | | Natural Gas (thousand cubic feet) | 47,979 | 13,124 | 34,855 | 266% | | Oil Equivalent (BOE) | 32,073 | 13,897 | 18,176 | 131% | | Average Daily BOE (BOE/day) | 352 | 153 | 199 | | | **Average Sales Price** | | | | | | Oil (USD/barrel) | 62.59 | 17.18 | 45.41 | 264% | | Natural Gas (USD/thousand cubic feet) | 3.10 | (0.95) | 4.05 | N/A | | Oil Equivalent (USD/BOE) | 51.62 | 13.58 | 38.04 | 280% | - Q2 2021 oil and gas revenue increased by **$1,467 thousand** (**776%**), primarily driven by a **264%** rise in oil prices and a **106%** increase in oil production[110](index=110&type=chunk) - Production increases are mainly attributable to assets acquired in H2 2020 and the reactivation of idle wells in H1 2021[110](index=110&type=chunk) 2021 Q2 vs 2020 Q2 Oil and Gas Production Costs (thousand USD) | Item | 2021 Q2 | 2020 Q2 | Change | Change Rate | | :-------------------- | :------ | :------ | :----- | :---------- | | Production Taxes | 131 | 13 | 118 | 908% | | Lease Operating Expenses | 477 | 333 | 144 | 43% | | **Total** | **608** | **346** | **262** | **76%** | - Oil and gas asset impairment expense was **zero** in Q2 2021, compared to **$1.8 million** in the prior year period[114](index=114&type=chunk) - General and administrative expenses increased by **$445 thousand** (**121%**), primarily due to professional services (accounting, tax, legal) and the hiring of a new VP of Operations[114](index=114&type=chunk)[115](index=115&type=chunk) - In non-operating income/loss, Q2 2021 saw **$317 thousand** in commodity derivative losses, compared to none in Q2 2020, while tradable equity securities generated **$23 thousand** in unrealized gains, reversing prior year losses[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) [Comparison of our Statements of Operations for the Six Months Ended June 30, 2021 and 2020](index=34&type=section&id=Comparison%20of%20our%20Statements%20of%20Operations%20for%20the%20Six%20Months%20Ended%20June%2030,%202021%20and%202020) 2021 H1 vs 2020 H1 Revenue, Production, and Average Sales Price | Metric | 2021 H1 | 2020 H1 | Change | Change Rate | | :-------------------- | :------ | :------ | :----- | :---------- | | **Revenue (thousand USD)** | | | | | | Oil | 2,639 | 1,056 | 1,583 | 150% | | Natural Gas | 228 | 56 | 172 | 307% | | **Total Revenue** | **2,867** | **1,112** | **1,755** | **158%** | | **Production** | | | | | | Oil (barrels) | 45,949 | 32,014 | 13,935 | 44% | | Natural Gas (thousand cubic feet) | 72,173 | 53,437 | 18,736 | 35% | | Oil Equivalent (BOE) | 57,978 | 40,920 | 17,058 | 42% | | Average Daily BOE (BOE/day) | 320 | 225 | 95 | | | **Average Sales Price** | | | | | | Oil (USD/barrel) | 57.43 | 32.99 | 24.44 | 74% | | Natural Gas (USD/thousand cubic feet) | 3.16 | 1.04 | 2.12 | 204% | | Oil Equivalent (USD/BOE) | 49.44 | 27.17 | 22.27 | 82% | - H1 2021 oil and gas revenue increased by **$1,755 thousand** (**158%**), primarily due to a **74%** rise in oil prices and a **44%** increase in oil production[123](index=123&type=chunk) - Production increases are mainly attributable to assets acquired in H2 2020 and the reactivation of idle wells in H1 2021[124](index=124&type=chunk) 2021 H1 vs 2020 H1 Oil and Gas Production Costs (thousand USD) | Item | 2021 H1 | 2020 H1 | Change | Change Rate | | :-------------------- | :------ | :------ | :----- | :---------- | | Production Taxes | 210 | 80 | 130 | 163% | | Lease Operating Expenses | 1,045 | 742 | 303 | 41% | | **Total** | **1,255** | **822** | **433** | **53%** | - Oil and gas asset impairment expense was **zero** in H1 2021, compared to **$1.8 million** in the prior year period[128](index=128&type=chunk) - General and administrative expenses increased by **$608 thousand** (**65%**), primarily due to legal fees (reimbursement of **$406 thousand** to APEG II) and increased compensation and benefits[129](index=129&type=chunk) - In non-operating income/loss, H1 2021 saw **$210 thousand** in commodity derivative losses, while tradable equity securities generated **$73 thousand** in unrealized gains, reversing prior year losses[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity significantly improved in H1 2021, with working capital increasing to **$7.4 million** due to a **$5.3 million** common stock offering Liquidity Key Metrics (as of June 30, 2021 vs December 31, 2020) | Metric (thousand USD) | June 30, 2021 | December 31, 2020 | Change (thousand USD) | | :-------------------- | :------------ | :---------------- | :-------------------- | | Cash and Equivalents | 6,582 | 2,854 | 3,728 | | Working Capital | 7,416 | 2,499 | 4,917 | | Total Assets | 17,627 | 12,363 | 5,264 | | Total Shareholders' Equity | 14,482 | 8,567 | 5,915 | | Current Ratio | 5.7:1.0 | 2.2:1.0 | | - Working capital increased by **$4.9 million** to **$7.4 million**, primarily attributable to **$5.3 million** in net proceeds from a February 2021 common stock offering[138](index=138&type=chunk)[141](index=141&type=chunk) - The company is considering various capital enhancement options, including a reserve-based credit facility, selling non-operating oil and gas assets, selling tradable equity securities, or issuing additional common stock[142](index=142&type=chunk) Cash Flow Summary (for the Six Months Ended June 30, 2021) | Cash Flow Type (thousand USD) | 2021 H1 | 2020 H1 | Change (thousand USD) | | :---------------------------- | :------ | :------ | :-------------------- | | Operating Activities Cash Flow | (591) | (470) | (121) | | Investing Activities Cash Flow | (877) | (133) | (744) | | Financing Activities Cash Flow | 5,196 | (152) | 5,348 | - In H1 2021, financing activities provided **$5.2 million** in cash, primarily from common stock issuance, contrasting with a cash outflow in the prior year period[145](index=145&type=chunk) - Cash used in investing activities increased to **$877 thousand**, mainly for oil and gas capital expenditures, particularly for reactivating idle wells in the Liberty County field[144](index=144&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a "smaller reporting company," the company is exempt from providing quantitative and qualitative market risk disclosures - As a "smaller reporting company," the company is not required to provide quantitative and qualitative disclosures about market risk under Regulation S-K Item 305(e)[148](index=148&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's disclosure controls and procedures were deemed ineffective due to insufficient segregation of duties in accounting and system access - As of June 30, 2021, the company's disclosure controls and procedures were deemed ineffective[150](index=150&type=chunk) - Key material weaknesses include insufficient segregation of duties due to limited accounting personnel and resources, and inadequate segregation of duties for logical access to accounting systems[151](index=151&type=chunk)[153](index=153&type=chunk) - The company has developed a remediation plan and is taking steps to address these material weaknesses[153](index=153&type=chunk) - There were no significant changes in internal control over financial reporting during the quarter[152](index=152&type=chunk) Part II. OTHER INFORMATION [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings information is disclosed in Note 9 to the financial statements, "Commitments, Contingencies and Related-Party Transactions" - Legal proceedings information is disclosed in Note 9 to the financial statements[157](index=157&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) The company's risk factors remain consistent with its 2020 annual report, which investors should consult for potential material impacts - The company's risk factors have not materially changed from those disclosed in its 2020 annual report[158](index=158&type=chunk) - Investors should consult the risk factors in the annual report, as various factors could materially and adversely affect the company's business, financial condition, operating results, and stock price[158](index=158&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No previously undisclosed unregistered equity securities sales occurred during the quarter or up to the report filing date - No unregistered sales of equity securities not previously disclosed in annual or 8-K reports occurred during the quarter ended June 30, 2021, or up to the report filing date[159](index=159&type=chunk) [Item 3. Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Not applicable [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) Not applicable [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the report, including the 2021 Equity Incentive Plan and CEO/CFO certifications - Exhibits include the 2021 Equity Incentive Plan, CEO and CFO 302 and 13a-14(b) certifications, and XBRL files[164](index=164&type=chunk) SIGNATURES [Report Signatures](index=43&type=section&id=Report%20Signatures) This report was formally signed and submitted by Ryan L. Smith, CEO and CFO of U.S. Energy Corp., on August 12, 2021 - This report was signed by Ryan L. Smith, Chief Executive Officer and Chief Financial Officer of U.S. Energy Corp., on August 12, 2021[170](index=170&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2021 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 000-06814 (Exact Name of Registrant as Specified in its Charter) | Wyoming | | 83-0205516 | | --- | --- | --- | | (State or othe ...

Part I [Business](index=9&type=section&id=Item%201.%20Business) The company is an independent energy firm acquiring and developing oil and gas properties, recently expanding into operated assets - The company is an independent energy company focused on the acquisition and development of oil and natural gas properties, primarily operating through a non-operator model but **expanded into operated properties in 2020**[43](index=43&type=chunk)[44](index=44&type=chunk) Key Operational and Reserve Data (as of Dec 31, 2020) | Metric | Value | | :--- | :--- | | Estimated Proved Reserves | 1,255,236 BOE (78% oil) | | Standardized Measure Value | $8.6 million | | Gross / Net Acres | 90,136 / 6,064 | | Gross / Net Producing Wells | 134 / 30.7 | | Average Net Production (2020) | 218 BOE per day | - In 2020, the company acquired operated properties in the Williston Basin, Permian Basin, Powder River Basin, and Gulf Coast, which represented **42.6% of the PV-10 value** of its reserves at year-end[49](index=49&type=chunk) - The company's business strategy focuses on disciplined capital deployment, growing production by performing workovers on operated idle wells, and continuously evaluating strategic acquisition opportunities[91](index=91&type=chunk)[94](index=94&type=chunk) - In February 2021, the company raised net proceeds of **$5.3 million** from an underwritten stock offering and in March 2021, it converted **~$413,000 of debt** to equity and hedged 100 barrels of crude oil per day at $61.90[111](index=111&type=chunk)[112](index=112&type=chunk)[114](index=114&type=chunk) [Risk Factors](index=21&type=section&id=Item%201A%20Risk%20Factors) The company faces significant risks from commodity price volatility, capital needs, operational hazards, and regulatory changes - The business is highly sensitive to volatile oil and gas prices, with the COVID-19 pandemic causing a **drastic decline in demand and prices**, adversely affecting revenues[119](index=119&type=chunk)[124](index=124&type=chunk)[126](index=126&type=chunk) - The company may need to raise additional capital for future acquisitions and operations, and failure to do so could force a **scale-back of the business plan**[116](index=116&type=chunk)[117](index=117&type=chunk) - **Material weaknesses in internal control** over financial reporting were identified as of December 31, 2020, related to inadequate segregation of duties[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - The company is subject to the full cost accounting "ceiling test," which resulted in a **$2.9 million non-cash write-down** of oil and gas properties in 2020[189](index=189&type=chunk)[192](index=192&type=chunk) - The company's common stock may be **delisted from The Nasdaq Capital Market** if it fails to meet continued listing requirements, such as a minimum $1.00 stock price[215](index=215&type=chunk) - Operations are subject to extensive environmental regulations that can restrict activities and impose **significant compliance costs and liabilities**[203](index=203&type=chunk)[204](index=204&type=chunk)[209](index=209&type=chunk) [Unresolved Staff Comments](index=42&type=section&id=Item%201B%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[234](index=234&type=chunk) [Properties](index=42&type=section&id=Item%202.%20Properties) The company's proved reserves increased due to acquisitions, while 2020 production declined due to shut-ins and natural declines Proved Oil and Natural Gas Reserves (BOE) | Year | Proved Developed | Proved Non-producing | Total Proved Reserves | | :--- | :--- | :--- | :--- | | **2020** | 1,150,368 | 104,868 | 1,255,236 | | **2019** | 995,720 | 0 | 995,720 | | **2018** | 874,260 | 0 | 874,260 | Annual Production Volumes | Year | Oil (Bbls) | Natural Gas (Mcfe) | Total (BOE) | Average (BOE/day) | | :--- | :--- | :--- | :--- | :--- | | **2020** | 60,469 | 116,082 | 79,816 | 218 | | **2019** | 110,090 | 209,518 | 145,010 | 397 | | **2018** | 75,003 | 286,692 | 122,785 | 336 | - The company did not participate in any development or exploratory drilling activities in 2020[247](index=247&type=chunk) - As of December 31, 2020, the company held **90,136 gross (6,064 net) acres**, with the majority being developed and held by production[251](index=251&type=chunk) - The company is in the process of selling a 30,400 square-foot office building and an adjacent 14-acre tract in Riverton, Wyoming[252](index=252&type=chunk) [Legal Proceedings](index=46&type=section&id=Item%203.%20Legal%20Proceedings) The company is contesting an arbitration claim from its former CEO and has resolved prior litigation with a major shareholder - In July 2020, former CEO David Veltri filed a request for arbitration, claiming breach of his employment agreement, which the company is vigorously contesting[423](index=423&type=chunk) - From February 2019 to August 2020, the company was involved in litigation with former CEO David Veltri and its largest shareholder, APEG II, which has since been dismissed[424](index=424&type=chunk) [Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[260](index=260&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=48&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on NASDAQ, no dividends are planned, and all Series A preferred stock was redeemed in 2020 - The company's common stock is traded on the NASDAQ Capital Market under the symbol **"USEG"**[262](index=262&type=chunk) - The company did not pay cash dividends in fiscal 2020 or 2019 and does not intend to in the foreseeable future[265](index=265&type=chunk) - On December 31, 2020, the company **redeemed all 50,000 outstanding shares of Series A preferred stock** by paying $2.0 million in cash and issuing 328,000 shares of common stock[267](index=267&type=chunk) [Selected Financial Data](index=48&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not required for smaller reporting companies - This Item is not required for smaller reporting companies[268](index=268&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue and production fell sharply in 2020, leading to a significant net loss, though liquidity improved via financing activities Comparison of Operations (2020 vs. 2019) | Metric | 2020 (in thousands) | 2019 (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $2,330 | $6,573 | -65% | | Total Operating Expenses | $7,700 | $7,363 | +5% | | Operating Loss | ($5,370) | ($790) | +580% | | Net Loss | ($6,439) | ($550) | +1071% | - The **65% decrease in revenue** was caused by a 45% decrease in production quantities and a 37% decrease in the average oil sales price[293](index=293&type=chunk) - The company recorded a **$2.9 million impairment** of oil and natural gas properties in 2020 due to the full cost ceiling limitation[298](index=298&type=chunk) - General and administrative expenses **decreased by 40% to $2.6 million**, mainly due to a $1.7 million reduction in professional fees[298](index=298&type=chunk) Cash Flow Summary (in thousands) | Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash (used in) provided by Operating Activities | ($717) | $638 | | Net cash used in Investing Activities | ($1,109) | ($281) | | Net cash provided by (used in) Financing Activities | $3,148 | ($1,165) | - Working capital surplus **increased by $1.0 million to $2.5 million** at year-end 2020, primarily due to $4.5 million in proceeds from common stock offerings[309](index=309&type=chunk) [Financial Statements and Supplementary Data](index=56&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited financial statements, with the auditor's report highlighting three critical audit matters - The independent auditor, Plante & Moran, PLLC, issued an **unqualified opinion** on the financial statements[343](index=343&type=chunk) - The audit identified **three critical audit matters**: 1) Impact of proved reserve estimates on property valuation, 2) Assessment of unevaluated properties, and 3) Accounting for property acquisitions[349](index=349&type=chunk)[352](index=352&type=chunk)[354](index=354&type=chunk) Consolidated Balance Sheet Highlights (as of Dec 31, in thousands) | Account | 2020 | 2019 | | :--- | :--- | :--- | | Cash and equivalents | $2,854 | $1,532 | | Net oil and natural gas properties | $7,438 | $8,454 | | Total Assets | $12,363 | $13,467 | | Total Liabilities | $3,796 | $2,257 | | Total Shareholders' Equity | $8,567 | $9,210 | - Supplemental disclosures show a standardized measure of discounted future net cash flows from proved reserves of **$8.6 million** at year-end 2020, down from $10.3 million at year-end 2019[470](index=470&type=chunk) - Subsequent to year-end, the company completed a **$5.3 million stock offering**, converted $413k in debt to equity, and entered a new hedging contract[472](index=472&type=chunk)[473](index=473&type=chunk)[475](index=475&type=chunk)[476](index=476&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=57&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants - None[322](index=322&type=chunk) [Controls and Procedures](index=57&type=section&id=Item%209A%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to two material weaknesses in internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were **not effective** as of December 31, 2020[324](index=324&type=chunk) - **Two material weaknesses** were identified in internal control over financial reporting: 1) Inadequate segregation of duties due to limited staff, and 2) Inadequate segregation of duties for system access[327](index=327&type=chunk) - As a smaller reporting company, an **attestation report from the independent registered public accounting firm is not included**[330](index=330&type=chunk) [Other Information](index=58&type=section&id=Item%209B%20Other%20Information) The company reports no other information under this item - None[331](index=331&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=59&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information is incorporated by reference from the company's 2021 Proxy Statement - Information required by this item will be **incorporated by reference** from the company's 2021 Proxy Statement[335](index=335&type=chunk) [Executive Compensation](index=59&type=section&id=Item%2011.%20Executive%20Compensation) Information is incorporated by reference from the company's 2021 Proxy Statement - Information required by this item will be **incorporated by reference** from the company's 2021 Proxy Statement[336](index=336&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=59&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information is incorporated by reference from the company's 2021 Proxy Statement - Information required by this item will be **incorporated by reference** from the company's 2021 Proxy Statement[337](index=337&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=59&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information is incorporated by reference from the company's 2021 Proxy Statement - Information required by this item will be **incorporated by reference** from the company's 2021 Proxy Statement[338](index=338&type=chunk) [Principal Accounting Fees and Services](index=59&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information is incorporated by reference from the company's 2021 Proxy Statement - Information required by this item will be **incorporated by reference** from the company's 2021 Proxy Statement[339](index=339&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=92&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements from Item 8 and all exhibits filed with or incorporated into the Form 10-K - This section lists the financial statements contained in Item 8 and all exhibits filed with the report[478](index=478&type=chunk)[479](index=479&type=chunk) - Filed exhibits include the Consent of the Independent Registered Public Accounting Firm and the Consent of the Reserve Engineer[479](index=479&type=chunk) - The Reserve Report Summary from Don Jacks, PE is filed as **Exhibit 99.1**[479](index=479&type=chunk) [Form 10-K Summary](index=94&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no summary under this item - None[483](index=483&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION For the Quarterly Period Ended September 30, 2020 [ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number 000-06814 U.S. ENERGY CORP. (Exact Name of Registrant as Specified in its Charter) | Wyoming | 83-0205516 | | --- | --- | | (State or other jurisdiction of | (I.R.S. Employer | | incorporation or organization) | Identification No.) | | 675 Bering Dr, Suite 100, H ...