U.S. Energy Corp. Enters Into Woodbine Participation Agreement

U.S. Energy Corp.

announced today that it has entered into a participation agreement with a private entity, Mueller Exploration, Inc. ("Mueller") to participate in the Woodbine Sub-Clarksville 7 Project located in Anderson and Cherokee Counties, Texas. Under the terms of the agreement, USE will earn a 26.5% initial working interest (19.6% net revenue interest) in approximately 6,766 gross acres (1,274 net acres to USE) through a cash payment of $1.7 million. The promoted amount will cover USE's portion of the costs for land, geological and geophysical work, as well as all dry hole costs for an initial test well in each of the seven prospects. Upon payout of USE's initial well costs in each unit, USE's interest will be reduced to a 19.8% working interest (14.7% net revenue interest). Future infill drilling will be on a heads up basis, and USE's interest will be 19.8% working interest (14.7% net revenue interest).