U.S. Energy Corp. Provides Operations Update

U.S. Energy Corp.

today provided an initial production rate on three participated wells in the Williston Basin of North Dakota, an operational update, and announced the closing of its Montana Leasehold Sale. Recently Completed Wells - Initial Production Rates The CDK 15-22 #1H well had an early 24-hour flow back rate of 1,449 BOE/D on a 36/64" restricted choke during drillout of the plugs. The initial production rate consisted of approximately 1,320 barrels of oil and 773 MCF of natural gas. The Company has an approximate 32% WI and 25% NRI in this well. The Larsen 32-29 #1H well had an early 24-hour flow back rate of 1,215 BOE/D on a 28/64" restricted choke during drillout of the plugs. The initial production rate consisted of approximately 998 barrels of oil and 1,300 MCF of natural gas. The Company has an approximate 28% WI and 21% NRI in this well. Slawson Exploration Company operates one unit in the SE HR acreage block. The Hatchet #1-23-14H well was drilled to total depth in April 2012 and was fracture stimulated with 34 stages using a sliding sleeve completion method in May. The well commenced production on May 7th with an early 24-hour flow back rate of 1,091 BOE/D on a 28/64" restricted choke. The initial production rate consisted of 1,007 barrels of oil and 503 MCF of natural gas. The Company has an approximate 1% WI and 0.8% NRI in the well. Operations Update Williston Basin, North Dakota - Yellowstone and SE HR Programs: The Skogen 17-20 #1H well has been drilled to depth and fracture stimulated with 35 stages. The well is currently scheduled to have the plugs drilled out and to be turned over to production the last week in June. The Company has an approximate 6.6% WI and 5% NRI in this well. The Kepner 9-4 #1H well is currently being fracture stimulated with a planned 35 stages. The well is currently scheduled to have the plugs drilled out and to be turned over to production the first week of July. The Company has an approximate 4.6% WI and 3.6% NRI in this well. The Wells 6-7 #1H well is currently being fracture stimulated with a planned 35 stages. The Company has an approximate 9.1% WI and 7% NRI in this well. The operator expects to drill approximately one well per month in the Yellowstone and SE HR prospects until all units are held by production, which is anticipated by mid 2013. Williston Basin, North Dakota - Rough Rider Program: The State 36-1 #3H infill well has been drilled to depth and fracture stimulated with 33 stages. The well is anticipated to have the plugs drilled out and to be turned over to production in the coming weeks. The Company has an approximate 3.3% WI and 2.6% NRI in this well. The State 36-1 #4H infill well is a planned Three Forks well and is scheduled to be drilled in Q4 2012. This will be the second Three Forks well drilled in our participated program with Brigham/Statoil. The Company has an approximate 3.3% WI and an approximate 2.6% NRI in this well. The Hovde 33-4 #2H infill well is also scheduled to be drilled in Q4 2012. The Company has an approximate 2.4% WI and an approximate 1.9% NRI in this well.