NEITHER  THIS  WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE
HAVE  BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT  OF  1933,  AS  AMENDED (THE
"SECURITIES  ACT"),  OR  ANY  APPLICABLE  STATE  SECURITIES LAWS, AND MAY NOT BE
OFFERED,  SOLD  OR  OTHERWISE  TRANSFERRED,  PLEDGED  OR HYPOTHECATED UNLESS (I)
PURSUANT  TO REGISTRATION UNDER THE SECURITIES ACT OR (II) IN COMPLIANCE WITH AN
EXEMPTION  THEREFROM  AND ACCOMPANIED, IF REQUESTED BY U.S. ENERGY CORP, WITH AN
OPINION  OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER IS
IN  COMPLIANCE  WITH  AN  EXEMPTION  THEREFROM.

          THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON
                                      ITS
                  EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
                TRANSFER SET FORTH IN ARTICLE II OF THIS WARRANT
--------------------------------------------------------------------------------

Warrant No.    -                                        Number of Shares: 50,000
            --   ----                                    (subject to adjustment)
Date  of  Issuance:  June  30,  2003

                                U.S. ENERGY CORP.

                          COMMON STOCK PURCHASE WARRANT

     THIS  IS TO CERTIFY THAT, for value received, SANDERS MORRIS HARRIS INC., a
Texas  corporation  (the  "Registered  Holder"),  or  its  permitted assigns, is
                           ------------------
entitled  to  purchase  from  U.S.  ENERGY  CORP.,  a  Wyoming  corporation (the
"Company"), at the place where the Warrant Office designated pursuant to Section
2.1  is located, at a purchase price per share of $5.00 (as adjusted pursuant to
the  terms  of  this  Warrant,  the  "Exercise  Price"),  50,000  shares of duly
                                      ---------------
authorized, validly issued, fully paid and nonassessable shares of Common Stock,
$0.01  par value per share, of the Company, and is entitled also to exercise the
other  appurtenant  rights,  powers  and  privileges hereinafter set forth.  The
number  of  shares  of  the  Common Stock purchasable hereunder and the Exercise
Price  are  subject  to  adjustment in accordance with Article III hereof.  This
Warrant  shall  expire  at  5:00  p.m.,  C.S.T.,  on  June  30,  2006.

     Certain  Terms  used  in  this  Warrant  are  defined  in  Article  IV.

                                    ARTICLE I

                              Exercise of Warrant
                               -------------------

     1.1     Method  of  Exercise.  This  Warrant  may  be  exercised  by  the
             --------------------
Registered  Holder  as a whole or in part from time to time until June 30, 2006,
at  which  time  this Warrant shall expire and be of no further force or effect;
provided,  however,  that  the  minimum  number  of  Warrant  Shares that may be
--------   -------
purchased  on  a  single exercise shall be 10,000 or the entire number of shares
remaining available for exercise hereunder, whichever is less.  To exercise this
Warrant,  the  Registered  Holder  or  permitted  assignees of all rights of the
Registered Holder shall deliver to the Company, at the Warrant Office designated
in Section 2.1(a), a written notice in the form of the Purchase Form attached as
Exhibit  A hereto, stating therein the election of the Registered Holder or such
permitted  assignees  of  the  Registered Holder to exercise this Warrant in the
manner  provided in the Purchase Form, (b) payment in full of the Exercise Price
(in  the manner described below) for all Warrant Shares purchased hereunder, and
(c)  this  Warrant.  Subject to compliance with Section 3.1(a)(vi), this Warrant
shall  be  deemed  to  be exercised on the date of receipt by the Company of the
Purchase Form, accompanied by payment for the Warrant Shares to be purchased and
surrender  of this Warrant, as aforesaid, and such date is referred to herein as
the  "Exercise  Date."  Upon  such  exercise (subject as aforesaid), the Company
      --------------
shall  issue  and  deliver  to  the Registered Holder a certificate for the full
number  of  the  Warrant  Shares purchasable by the Registered Holder hereunder,
against the receipt by the Company of the total Exercise Price payable hereunder
for  all  such  Warrant  Shares in cash or by certified or cashier's check.  The
Person  in  whose name the certificate(s) for Common Stock is to be issued shall
be deemed to have become a holder of record of such Common Stock on the Exercise
Date.

     1.2     Fractional  Shares.  No  fractional shares of Common Stock shall be
             ------------------
issued upon exercise of this Warrant. Instead of any fractional shares of Common
Stock  that  would  otherwise  be  issuable  upon  exercise of this Warrant, the
Company shall pay a cash adjustment in respect of such fractional interest equal
to the fair market value of such fractional interest as determined in good faith
by  the  Board  of  Directors.

                                   ARTICLE II

                            Warrant Office; Transfer
                            ------------------------

     2.1     Warrant  Office.  The  Company shall maintain an office for certain
             ---------------
purposes  specified  herein (the "Warrant Office"), which office shall initially
                                  --------------
be  the Company's office at 877 North 8th West, Riverton, Wyoming 82501, and may
subsequently be such other office of the Company or of any transfer agent of the
Common  Stock  in  the  continental  United  States  of which written notice has
previously  been given to the Registered Holder.  The Company shall maintain, at
the Warrant Office, a register for the Warrant in which the Company shall record
the  name  and address of the Registered Holder, as well as the name and address
of  each  permitted  assignee  of  the  rights  of  the  Registered  Holder.

     2.2     Ownership  of  Warrant.  The  Company  may  deem  and  treat  the
             ----------------------
Registered  Holder as the holder and owner hereof (notwithstanding any notations
of  ownership  or  writing hereon made by anyone other than the Company) for all
purposes  and  shall  not  be  affected  by  any  notice  to the contrary, until
presentation  of  this  Warrant for registration of transfer as provided in this
Article  II.

     2.3     Transfer  of  Warrants.  The  Company  agrees  to  maintain  at the
             ----------------------
Warrant  Office  books  for the registration and transfer of this Warrant.  This
Warrant  may  be  transferred  in  whole  or in part only in compliance with the
applicable  law  and  only  to  shareholders, officers, and employees of Sanders
Morris Harris Inc. or to any person who succeeds to all of the assets of Sanders
Morris  Harris  Inc. The Company, from time to time, shall register the transfer
of  this  Warrant  in  such  books upon surrender of this Warrant at the Warrant
Office,  properly  endorsed, together with a written assignment of this Warrant,
substantially  in  the form of the Assignment attached as Exhibit B hereto. Upon
any  such  transfer,  a  new  Warrant shall be issued to the transferee, and the
Company  shall  cancel the surrendered Warrant.  The Registered Holder shall pay
all  taxes  and  all  other  expenses and charges payable in connection with the
transfer  of  Warrants  pursuant  to  this  Section  2.3.

     2.4     Registration  Rights.  The  Company  agrees  (a)  that  the Warrant
             --------------------
Shares shall be "Registrable Securities" under the Registration Rights Agreement
dated  of  even  date herewith (the "Registration Rights Agreement") between the
Company  and the Registered Holder and (b) that the Registered Holder shall have
the  rights  and  obligations  of  a Holder set forth on the Registration Rights
Agreement.

     2.5     No  Rights  as  Shareholder  Until Exercise.  This Warrant does not
             -------------------------------------------
entitle  the  Registered  Holder  to  any  voting  rights  or  other rights as a
shareholder  of the Company prior to the exercise hereof.  Upon the surrender of
this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares
so purchased shall be and be deemed to be issued to the Registered Holder as the
record owner of such shares as of the close of business on the later of the date
of  such  surrender  or  payment.

     2.6     Expenses  of  Delivery  of Warrants.  Except as provided in Section
             -----------------------------------
2.3  above,  the  Company  shall  pay all reasonable expenses, taxes (other than
transfer  taxes)  and  other charges payable in connection with the preparation,
issuance  and  delivery  of  Warrants  and  related  Warrant  Shares  hereunder.

     2.7     Compliance  with  Securities  Laws.  The Registered Holder (and its
             ----------------------------------
transferees  and  assigns),  by acceptance of this Warrant, covenants and agrees
that  such  Registered  Holder  is acquiring the Warrants evidenced hereby, and,
upon  exercise  hereof, the Warrant Shares, for its own account as an investment
and  not  with  a  view  to  distribution thereof.  Neither this Warrant nor the
Warrant  Shares issuable hereunder have been registered under the Securities Act
or  any  state  securities  laws  and no transfer of this Warrant or any Warrant
Shares  shall  be  permitted  unless  the  Company  has  received notice of such
transfer in the form of the assignment attached hereto as Exhibit B, accompanied
                                                          ---------
by  an  opinion  of  counsel  reasonably  satisfactory  to  the  Company that an
exemption  from  registration  of  such  Warrant  or  Warrant  Shares  under the
Securities Act is available for such transfer, except that no such opinion shall
be  required  after the registration for resale of the Warrant Shares has become
effective.  Upon  any  exercise  of the Warrants prior to effective registration
for  resale  or  except as in accordance with Rule 144 under the Securities Act,
certificates  representing  the  Warrant  Shares shall bear a restrictive legend
substantially  identical  to  that  set  forth  as  follows:

     "The  securities  represented  by this certificate have not been registered
     under the Securities Act of 1933, as amended, or the securities laws of any
     state  (collectively,  the  "Acts").  Neither  the  shares nor any interest
     therein  may  be offered, sold, transferred, pledged, or otherwise disposed
     of  in  the  absence of an effective registration statement with respect to
     the  shares  under  all  of  the  applicable Acts, or an opinion of counsel
     satisfactory to U.S. Energy Corp. to the effect that such registrations are
     not  required."

     (c)     Any  purported  transfer  of  the  Warrant or Warrant Shares not in
compliance  with  the  provisions  of this section shall be null and void.  Stop
transfer  instructions  have been or will be imposed with respect to the Warrant
Shares  so  as  to  restrict  resale  or other transfer thereof, subject to this
Section  2.7.

                                  ARTICLE III

                            Anti-Dilution Provisions
                            ------------------------

     3.1     Adjustment  of  Exercise  Price  and Number of Warrant Shares.  The
             -------------------------------------------------------------
Exercise  Price and number of Warrant Shares shall be subject to adjustment from
time  to time as hereinafter provided in this Article III.  No other adjustments
to  the  Exercise  Price  or the number of Warrant Shares shall be made, for any
reason.

     (a)     Exercise Price Adjustments.  The Exercise Price shall be subject to
             --------------------------
adjustment  from  time  to  time  as  follows:

           (i) Adjustment  for  Stock  Splits  and  Combinations. If the Company
               -------------------------------------------------
     shall,  at  any  time  or  from  time  to  time  after the date hereof (the
     "Original  Issue  Date")  while  this Warrant remains outstanding, effect a
      ---------------------
     subdivision  of  the outstanding Common Stock, the Exercise Price in effect
     immediately  before  such  subdivision  shall be proportionately decreased.
     Conversely, if the Company shall at any time or from time to time after the
     Original  Issue  Date combine the outstanding shares of Common Stock into a
     smaller  number  of shares, the Exercise Price in effect immediately before
     such  combination  shall be proportionately increased. Any adjustment under
     this  Section  3.1(a)(i) shall become effective at the close of business on
     the  date  the  subdivision  or  combination  becomes  effective.

          (ii) Adjustment for Reclassification, Exchange, and  Substitution.  If
               ------------------------------------------------------------
     at  any  time or from time to time after the Original Issue Date while this
     Warrant remains outstanding, the Common Stock is changed into the same or a
     different  number  of  shares  of any class or classes of stock, whether by
     recapitalization,  reclassification  or  otherwise,  the  Registered Holder
     shall  have  the  right  thereafter to convert such stock into the kind and
     amount of stock and other securities receivable upon such recapitalization,
     reclassification or other change by holders of the maximum number of shares
     of  Common  Stock  into  which  such shares of Common Stock could have been
     converted  immediately  prior to such recapitalization, reclassification or
     change.

          (iii)  Reorganizations, Mergers, Consolidations, or Sales of Assets.
                 -------------------------------------------------------------
     If  at  any  time  or from time to time after the Original Issue Date while
     this  Warrant remains outstanding, there is a capital reorganization of the
     Common  Stock,  provision shall be made so that the Registered Holder shall
     thereafter be entitled to receive upon exercise hereof the number of shares
     of  stock  or other securities or property of the Company to which a holder
     of  the  number  of  shares  of  Common  Stock  deliverable  upon  exercise
     immediately  prior  to  such  event would have been entitled as a result of
     such  capital  reorganization.

          (iv) Rounding of Calculations; Minimum  Adjustment.  All  calculations
               ---------------------------------------------
     under  this Section 3.1(a) shall be made to the nearest cent. Any provision
     of  this  Section 3.1 to the contrary notwithstanding, no adjustment in the
     Exercise Price shall be made if the amount of such adjustment would be less
     than  one  percent.

     (v)  Timing  of  Issuance  of  Additional  Common  Stock  Upon  Certain
          ------------------------------------------------------------------
     Adjustments.  In  any  case  in which the provisions of this Section 3.1(a)
     -----------
     shall require that an adjustment shall become effective immediately after a
     record  date  for  an  event, the Company may defer until the occurrence of
     such  event  issuing  to  the  Registered Holder after such record date and
     before  the  occurrence of such event the additional shares of Common Stock
     or  other  property  issuable or deliverable upon exercise by reason of the
     adjustment required by such event over and above the shares of Common Stock
     or  other property issuable or deliverable upon such exercise before giving
     effect to such adjustment; provided, however, that the Company upon request
                                --------  -------
     shall  deliver  to  such  Registered Holder a due bill or other appropriate
     instrument  evidencing  such  Registered  Holder's  right  to  receive such
     additional  shares or other property, and such cash, upon the occurrence of
     the  event  requiring  such  adjustment.

     (b)     Statement Regarding Adjustments.  Whenever the Exercise Price
             -------------------------------
shall  be  adjusted  as  provided in Section 3.1(a), and upon each change in the
number of shares of the Common Stock issuable upon exercise of this Warrant, the
Company  shall  thereafter  give notice thereof to the Registered holder, with a
statement showing in detail the facts requiring such adjustment and the Exercise
Price  and  new  number  of  shares  issuable that shall be in effect after such
adjustment'.

     3.2     Costs.  The  Registered  Holder  shall  pay all documentary, stamp,
             -----
transfer  or  other transactional taxes attributable to the issuance or delivery
of  the Warrant Shares upon exercise of this Warrant.  Additionally, the Company
shall  not  be  required to pay any taxes which may be payable in respect of any
transfer  involved  in  the  issuance  or  delivery  of any certificate for such
Warrant  Shares.  The Registered Holder shall reimburse the Company for any such
taxes  assessed  against  the  Company.

     3.3     Reservation  of  Shares.  The Company shall reserve at all times so
             -----------------------
long  as  this  Warrant remains outstanding, free from preemptive rights, out of
its treasury Common Stock or its authorized but unissued shares of Common Stock,
or  both,  solely  for  the  purpose  of effecting the exercise of this Warrant,
sufficient  shares  of  Common  Stock  to  provide  for  the  exercise  hereof.

     3.4     Valid  Issuance.  All  shares  of  Common Stock which may be issued
             ---------------
upon  exercise  of  this  Warrant  will upon issuance by the Company be duly and
validly  issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof attributable to any act or omission
by the Company, and the Company shall take no action which will cause a contrary
result  (including without limitation, any action which would cause the Exercise
Price  to  be  less  than  the  par  value,  if  any,  of  the  Common  Stock).

                                  'ARTICLE IV

                            Covenant of the Company
                            -----------------------

     The  Company  covenants  and agrees that this Warrant shall be binding upon
any  corporation  succeeding  to  the  Company  by  merger  or  consolidation'.

                                    ARTICLE V

                                  Miscellaneous
                                  -------------

     5.1     Entire  Agreement.  This  Warrant  and  the  Registration  Rights
             -----------------
Agreement  contain  the  entire  agreement between the Registered Holder and the
Company  with  respect  to the Warrant Shares that it can purchase upon exercise
hereof  and  the  related  transactions and supersedes all prior arrangements or
understanding  with  respect  thereto.

     5.2     Governing  Law.  This Warrant shall be governed by and construed in
             --------------
accordance with the internal laws of the State of Wyoming, without regard to its
conflict  of law provisions.  Any litigation shall be conducted in the courts of
the  State  of  Wyoming,  or  the  United  States  District Court for Wyoming or
Colorado.

     5.3     Waiver and Amendment.  Any term or provision of this Warrant may be
             --------------------
waived  at  any time by the party which is entitled to the benefits thereof, and
any term or provision of this Warrant may be amended or supplemented at any time
by  the  written consent of the parties (it being agreed that an amendment to or
waiver  under  any of the provisions of Article III of this Warrant shall not be
considered  an amendment of the number of Warrant Shares or the Exercise Price).
No  waiver by any party of any default, misrepresentation, or breach of warranty
or  covenant hereunder, whether intentional or not, shall be deemed to extend to
any  prior  or  subsequent  default, misrepresentation, or breach of warranty or
covenant  hereunder or affect in any way any rights arising because of any prior
or  subsequent  such  occurrence.

     5.4     Illegality.  In  the  event  that any one or more of the provisions
             ----------
contained  in  this  Warrant  shall  be  determined  to  be  invalid, illegal or
unenforceable  in  any  respect  for  any  reason,  the  validity,  legality and
enforceability  of  any  such  provision  in any other respect and the remaining
provisions  of this Warrant shall not, at the election of the party for whom the
benefit  of  the  provision  exists,  be  in  any  way  impaired.

     5.5     Copy  of  Warrant.  A copy of this Warrant shall be filed among the
             -----------------
records  of  the  Company.

     5.6     Notice.  Any  notice  or other document required or permitted to be
             ------
given  or  delivered  to the Registered Holder shall be delivered at, or sent by
certified  or  registered  mail  to  such Registered Holder at, the last address
shown  on  the  books  of  the  Company maintained at the Warrant Office for the
registration  of  this  Warrant  or  at  any  more  recent  address of which the
Registered  Holder  shall  have  notified the Company in writing.  Any notice or
other  document  required  or permitted to be given or delivered to the Company,
other  than  such  notice  or  documents required to be delivered to the Warrant
Office,  shall  be delivered at, or sent by certified or registered mail to, the
office  of  the  Company  at  877 North 8th West, Riverton, Wyoming 82501 or any
other address within the continental United States of America as shall have been
designated  in  writing  by  the  Company  delivered  to  the Registered Holder.

     5.7     Limitation  of  Liability;  Not  Stockholders.  Subject  to  the
             ---------------------------------------------
provisions  of  Article  III, until the exercise of this Warrant, the Registered
Holder  shall  not have or exercise any rights by virtue hereof as a stockholder
of  the  Company,  including,  without limitation, the right to vote, to receive
dividends  and  other distributions, or to receive notice of, or attend meetings
of  stockholders or any other proceedings of the Company.  Until the exercise of
this  Warrant, no provision hereof, and no mere enumeration herein of the rights
or privileges of the Registered Holder, shall give rise to any liability of such
Registered  Holder  for the purchase price of any shares of Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or
by  creditors  of  the  Company.

     5.8     Exchange,  Loss,  Destruction,  etc.  of  Warrant.  Upon receipt of
             -------------------------------------------------
evidence  satisfactory  to  the  Company  (an affidavit of the Registered Holder
shall be satisfactory evidence) of the loss, theft, mutilation or destruction of
this  Warrant,  and,  in  the  case of any such loss, theft or destruction, upon
delivery  of  a bond of indemnity in such form and amount as shall be reasonably
satisfactory  to the Company, or, in the event of such mutilation upon surrender
and  cancellation  of  this  Warrant,  the  Company  will make and deliver a new
Warrant  of  like  tenor,  in  lieu of such lost, stolen, destroyed or mutilated
Warrant;  provided, however, that the original Registered Holder of this Warrant
          --------  -------
shall  not  be  required  to  provide any such bond of indemnity and may in lieu
thereof  provide  his  agreement  of  indemnity.  Any  Warrant  issued under the
provisions  of  this  Section  6.8  in  lieu  of any Warrant alleged to be lost,
destroyed  or  stolen,  or in lieu of any mutilated Warrant, shall constitute an
original  contractual obligation on the part of the Company.  This Warrant shall
be promptly canceled by the Company upon the surrender hereof in connection with
any  exchange  or  replacement.  The Registered Holder of this Warrant shall pay
all  taxes  (including  securities  transfer  taxes)  and all other expenses and
charges  payable  in  connection with the preparation, execution and delivery of
replacement  Warrant(s)  pursuant  to  this  Section  6.8.

     5.9     Headings.  The  Article  and  Section and other headings herein are
             --------
for convenience only and are not a part of this Warrant and shall not affect the
interpretation  thereof.

     5.10     Successors  and  Assigns.  Subject  to applicable securities laws,
              ------------------------
this  Warrant and the rights and obligations evidenced hereby shall inure to the
benefit  of and be binding upon the successors of the Company and the successors
and  permitted assigns of Registered Holder.  The provisions of this Warrant are
intended  to  be  for the benefit of all Registered Holders from time to time of
this Warrant and shall be enforceable by any such Registered Holder or holder of
Warrant  Shares.

     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in its
name.

     Dated:  June  30,  2003

                                       U.S.  ENERGY  CORP.



                                       By
                                         ---------------------------------------
                                       Name:
                                            ------------------------------------
                                       Title:
                                             -----------------------------------


<PAGE>


                                    Exhibit A

                                  PURCHASE FORM

To:     U.S.  Energy  Corp.                                 Dated:
                                                                  --------------

     The  undersigned,  pursuant  to  the  provisions  set forth in the attached
Warrant (No.     ), hereby irrevocably elects to purchase          shares of the
            -----                                         ---------
Common  Stock covered by such Warrant. The undersigned herewith makes payment of
the  full  exercise price for such shares at the price per share provided for in
such  Warrant,  which  is $      per share in lawful money of the United States.
                           -----

                                                [                              ]
                                                 ------------------------------



                                                -------------------------------
                                                Name:
                                                     --------------------------
                                                Title:
                                                      -------------------------


<PAGE>


                                    Exhibit B

                                   ASSIGNMENT

     For  value  received,                               , hereby sells, assigns
                           ------------------------------
and  transfers unto                                 the within Warrant, together
                    --------------------------------
with  all  right,  title  and  interest  therein  and  does  hereby  irrevocably
constitute  and  appoint  attorney, to transfer said Warrant on the books of the
Company,  with  full  power  of  substitution.



                                            ------------------------------------

Dated:                        ,  200
      ------------------------      --