U. S. ENERGY CORP.

                             STOCK OPTION AGREEMENT


This  stock  option  agreement  is made in Riverton, WY this 1st  day of August,
2001  by and between U.S. ENERGY CORP. (herein referred to as the "Company") and
                         (hereinafter  referred  to  as  the  "Optionee").
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1.   The Company hereby grants to the Optionee a five year option to purchase an
     aggregate  of  40,000  shares of the common stock of the Company, $0.01 par
     value (hereinafter referred to as the "Shares") at an option price of $4.30
     per  share.  The  Option  shall  be  available  for  exercise  immediately.

2.   This option, to the extent not exercised, shall expire on July 31, 2006, or
     earlier  upon  the  death  of  the  Optionee.

3.   The Optionee may exercise this option at any time, or from time to time, as
     to  all  or any part of the Shares by giving written notice to the Company,
     at  its  principal  office,  specifying  the  number of Shares to which the
     exercise shall apply, and accompanied by payment of the full purchase price
     for  the  Shares being purchased. Optionee shall also execute an investment
     representation  statement  in  a form approved by the board of directors of
     the  company  prior to issuance of share certificates. Upon compliance with
     the  terms  of  this  Agreement,  certificate(s)  representing  the  Shares
     purchased  shall  be issued as soon as practicable after notice of exercise
     is  given  to  the  Company.

4.   This  option is not transferable by the Optionee and is exercisable only by
     him.

5.   In  the  event  of  Optionee's  death prior to the complete exercise of the
     option, any remaining portion of the option may be exercised in whole or in
     part  after  the  date  of the Optionee's death, but only by the Optionee's
     estate  or  by  or on behalf of the person(s) to whom the Optionee's rights
     pass  under his will or the laws of descent and distribution. To the extent
     not  exercised,  the  option  shall terminate one hundred eighty (180) days
     after  Optionee's  death.

6.   The  Optionee  hereby  represents that the option granted hereunder and the
     Shares  purchased by him pursuant to the exercise of all or any part of the
     option  are  and will be acquired by him for investment and not with a view
     to  the  distribution  thereof.  The  option  is  granted by the Company in
     reliance  upon  this  representation.  Upon  the  exercise  of  the option,
     Optionee  shall  not thereafter transfer, encumber or dispose of the Shares
     so  purchased unless: (a) an effective registration statement covering such
     Shares  is  filed  pursuant  to the Securities Act of 1933, as amended, and
     applicable state law; or (b) an opinion letter of the Optionee's counsel is
     obtained,  satisfactory  to the Company and its counsel, that such transfer
     is  not  in violation of any applicable federal or state securities laws or
     regulations.

IN  WITNESS WHEREOF, the Company has caused this Agreement to be executed on its
behalf  by its duly authorized officer and to be sealed with its corporate seal,
attested  by  its  secretary,  and Optionee has executed this Agreement with the
intent  to  be  legally  bound  as  of  the  date  written  below.


                                         U.  S.  ENERGY  CORP.



Attest:                                  By:
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        Max  T.  Evans,                      Keith  G.  Larsen,
        Secretary                            President


                                         OPTIONEE:



Dated:
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