----

| x      | Quarterly                report pursuant to section 13 or 15(d) of the Securities Exchange                Act of                1934  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------|
|   | For                the quarter ended March 31, 2007 or                                                                                |
|   |                                                                                                                                  |
| o      | Transition                report pursuant to section 13 or 15(d) of the Securities Exchange                Act of                1934 |
|   | For                the transition period from ___________ to                ____________                                              |

| **U.S.                ENERGY CORP.**                                              |
|-----------------------------------------------------------------------------------|
| (Exact                Name of Company as Specified in its                Charter) |

| **Wyoming**                                                     |   | **83-0205516**                     |
|-----------------------------------------------------------------|--------|------------------------------------|
| (State                or other jurisdiction of                  |   | (I.R.S.                Employer    |
| incorporation                or organization)                   |   | Identification                No.) |
|                                                            |   |                               |
| **877                North 8****th****West, Riverton, WY**      |   | **82501**                          |
| (Address                of principal executive offices)         |   | **(Zip                Code)**      |
|                                                            |   |                               |
| Company's                telephone number, including area code: |   | **(307)                856-9271**  |

| Not                Applicable                                                                    |
|--------------------------------------------------------------------------------------------------|
| Former                name, address and fiscal year, if changed since last                report |

----

| Class                                       |   | Outstanding                Shares at May 15, 2007 |
|---------------------------------------------|--------|---------------------------------------------------|
| Common                stock, $.01 par value |   | 20,587,098                                        |

----

**U.S.      ENERGY CORP. and SUBSIDIARIES**

**INDEX**

|                        |                                                                                                                                                        | Page                No.     |
|-----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|
| **PART                I.**  | **FINANCIAL                INFORMATION**                                                                                                                    |                        |
|                        |                                                                                                                                                        |                        |
| ITEM                1.      | Financial                Statements.                                                                                                                        |                        |
|                        |                                                                                                                                                        |                        |
|                        | Condensed                Consolidated Balance Sheets March 31, 2007 and December 31, 2006                (unaudited)                                        | 4-5                         |
|                        |                                                                                                                                                        |                        |
|                        | Condensed                Consolidated Statements of Operations for the Three months Ended                March 31,                2007 and 2006 (unaudited) | 6                           |
|                        |                                                                                                                                                        |                        |
|                        | Condensed                Consolidated Statements of Cash Flows Three Months Ended March 31,                2007                and 2006 (unaudited)         | 7-8                         |
|                        |                                                                                                                                                        |                        |
|                        | Notes                to Condensed Consolidated Financial Statements (unaudited)                                                                             | 9-23                        |
|                        |                                                                                                                                                        |                        |
| ITEM                2.      | Management’s                Discussion and Analysis of Financial Condition and Results of                Operations                                   | 24-34                       |
|                        |                                                                                                                                                        |                        |
| ITEM                3.      | Quantitative                and Qualitative Disclosures about Market Risk                                                                                   | 34                          |
|                        |                                                                                                                                                        |                        |
| ITEM                4.      | Controls                and Procedures                                                                                                                      | 34                          |
|                        |                                                                                                                                                        |                        |
| **PART                II.** | **OTHER                INFORMATION**                                                                                                                        |                        |
|                        |                                                                                                                                                        |                        |
| ITEM                1.      | Legal                Proceedings                                                                                                                            | 35-37                       |
|                        |                                                                                                                                                        |                        |
| ITEM                2.      | Changes                in Securities and Use of Proceeds                                                                                                    | 37                          |
|                        |                                                                                                                                                        |                        |
| ITEM                3.      | Defaults                Upon Senior Securities                                                                                                              | 37                          |
|                        |                                                                                                                                                        |                        |
| ITEM                4.      | Submission                of Matters to a Vote of Shareholders                                                                                              | 37                          |
|                        |                                                                                                                                                        |                        |
| ITEM                5.      | Other                Information                                                                                                                            | 37                          |
|                        |                                                                                                                                                        |                        |
| ITEM                6.      | Exhibits                and Reports on Form 8-K                                                                                                             | 38                          |
|                        |                                                                                                                                                        |                        |
|                        | Signatures                                                                                                                                                  | 39                          |
|                        |                                                                                                                                                        |                        |
|                        | Certifications                                                                                                                                              | See                Exhibits |

----

**PART      I. FINANCIAL INFORMATION**

**ITEM      1. Financial Statements**

| **U.S.                  ENERGY CORP. AND SUBSIDIARIES**    |   |
|------------------------------------------------------------|--------|
| **CONDENSED                  CONSOLIDATED BALANCE SHEETS** |   |
| **ASSETS**                                                 |   |
|                                                       |   |   |   |   |   |
|                                                       |   | March                  31, |   | December                  31, |   |
|                                                       |   | 2007 |   | 2006 |   |
|                                                       |   | (Unaudited) |   | (Unaudited) |   |
| CURRENT                  ASSETS:                           |   |   |   |   |   |
| Cash                  and cash equivalents                 |   | $ | 15,402,300 |   | $ | 16,973,500 |   |
| Marketable                  securities                     |   |   |   |   |   |   |   |
| Trading                  securities                   |   |   | 86,000 |   |   | 123,400 |   |
| Available                  for sale securities        |   |   | -- |   |   | 1,148,500 |   |
| Accounts                  receivable                       |   |   | 621,600 |   |   | 344,900 |   |
| Note                  receivable                           |   |   | -- |   |   | 560,500 |   |
| Assets                  held for sale                      |   |   | 9,958,000 |   |   | 9,686,300 |   |
| Deferred                  tax assets                       |   |   | 15,053,500 |   |   | 14,321,600 |   |
| Inventories                                                |   |   | 33,800 |   |   | 33,700 |   |
| Prepaid                  expenses and other current assets |   |   | 273,300 |   |   | 132,800 |   |
| Total                  current assets                 |   |   | 41,428,500 |   |   | 43,325,200 |   |
|                                                       |   |   |   |   |   |   |   |
| INVESTMENTS:                                               |   |   |   |   |   |   |   |
| Other                                                      |   |   | 27,000 |   |   | 27,000 |   |
|                                                       |   |   |   |   |   |   |   |
| PROPERTIES                  AND EQUIPMENT:                 |   |   | 11,675,300 |   |   | 11,563,500 |   |
| Less                  accumulated depreciation,            |   |   |   |   |   |   |   |
| depletion                  and amortization           |   |   | (5,566,400 | ) |   | (5,454,200 | ) |
| Net                  properties and equipment         |   |   | 6,108,900 |   |   | 6,109,300 |   |
|                                                       |   |   |   |   |   |   |   |
| OTHER                  ASSETS:                             |   |   |   |   |   |   |   |
| Note                  receivable trade                     |   |   | 9,600 |   |   | 10,000 |   |
| Deferred                  tax assets                       |   |   | 391,400 |   |   | 610,200 |   |
| Real                  estate held for resale               |   |   | 1,819,700 |   |   | 1,819,700 |   |
| Total                  other assets                   |   |   | 2,220,700 |   |   | 2,439,900 |   |
| Total                  assets                              |   | $ | 49,785,100 |   | $ | 51,901,400 |   |
|                                                       |   |   |   |   |   |   |   |

----

| **U.S.                  ENERGY CORP. AND SUBSIDIARIES**          |   |
|------------------------------------------------------------------|--------|
| **CONDENSED                  CONSOLIDATED BALANCE SHEETS**       |   |
| **LIABILITIES                  AND SHAREHOLDERS' EQUITY**        |   |
|                                                             |   |   |   |   |   |
|                                                             |   | March                  31, |   | December                  31, |   |
|                                                             |   | 2007 |   | 2006 |   |
|                                                             |   | (Unaudited) |   | (Unaudited) |   |
| CURRENT                  LIABILITIES:                            |   |   |   |   |   |
| Accounts                  payable                                |   | $ | 586,900 |   | $ | 1,115,000 |   |
| Accrued                  compensation expense                    |   |   | 619,300 |   |   | 1,190,200 |   |
| Current                  portion of long-term debt               |   |   | 939,100 |   |   | 937,200 |   |
| Liabilities                  held for sale                       |   |   | 7,418,900 |   |   | 7,375,800 |   |
| Refundable                  deposits                             |   |   | 800,000 |   |   | 800,000 |   |
| Other                  current liabilities                       |   |   | 213,000 |   |   | 177,000 |   |
| Total                  current liabilities                  |   |   | 10,577,200 |   |   | 11,595,200 |   |
|                                                             |   |   |   |   |   |   |   |
| LONG-TERM                  DEBT, net of current portion          |   |   | 274,000 |   |   | 294,900 |   |
|                                                             |   |   |   |   |   |   |   |
| ASSET                  RETIREMENT OBLIGATIONS,                   |   |   | 126,500 |   |   | 124,400 |   |
|                                                             |   |   |   |   |   |   |   |
| OTHER                  ACCRUED LIABILITIES                       |   |   | 478,700 |   |   | 462,700 |   |
|                                                             |   |   |   |   |   |   |   |
| MINORITY                  INTERESTS                              |   |   | 4,750,400 |   |   | 4,700,200 |   |
|                                                             |   |   |   |   |   |   |   |
| COMMITMENTS                  AND CONTINGENCIES                   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |
| FORFEITABLE                  COMMON STOCK, $.01 par value        |   |   |   |   |   |   |   |
| 184,860                  and 297,540 shares issued, respectively |   |   |   |   |   |   |   |
| forfeitable                  until earned                        |   |   | 1,085,200 |   |   | 1,746,600 |   |
|                                                             |   |   |   |   |   |   |   |
| PREFERRED                  STOCK,                                |   |   |   |   |   |   |   |
| $.01                  par value; 100,000 shares authorized       |   |   |   |   |   |   |   |
| No                  shares issued or outstanding                 |   |   | -- |   |   | -- |   |
|                                                             |   |   |   |   |   |   |   |
| SHAREHOLDERS'                  EQUITY:                           |   |   |   |   |   |   |   |
| Common                  stock, $.01 par value;                   |   |   |   |   |   |   |   |
| unlimited                  shares authorized; 20,023,307    |   |   |   |   |   |   |   |
| and                  19,659,591 shares issued net of        |   |   |   |   |   |   |   |
| treasury                  stock, respectively               |   |   | 200,200 |   |   | 196,600 |   |
| Additional                  paid-in capital                      |   |   | 74,127,000 |   |   | 72,990,700 |   |
| Accumulated                  deficit                             |   |   | (40,420,100 | ) |   | (39,101,900 | ) |
| Treasury                  stock at cost, 497,845 shares          |   |   | (923,500 | ) |   | (923,500 | ) |
| Unrealized                  gain on marketable securities        |   |   | -- |   |   | 306,000 |   |
| Unallocated                  ESOP contribution                   |   |   | (490,500 | ) |   | (490,500 | ) |
| Total                  shareholders' equity                 |   |   | 32,493,100 |   |   | 32,977,400 |   |
| Total                  liabilities and shareholders' equity      |   | $ | 49,785,100 |   | $ | 51,901,400 |   |
|                                                             |   |   |   |   |   |   |   |

----

| **U.S.                  ENERGY CORP. AND SUBSIDIARIES**              |   |
|----------------------------------------------------------------------|--------|
| **CONDENSED                  CONSOLIDATED STATEMENTS OF OPERATIONS** |   |
| **(Unaudited)**                                                      |   |
|                                                                 |   |   |   |   |   |
|                                                                 |   | Three                  months ended March 31, |   |
|                                                                 |   | 2007 |   | 2006 |   |
| OPERATING                  REVENUES:                                 |   |   |   |   |   |
| Real                  estate operations                         |   | $ | 33,000 |   | $ | 54,800 |   |
| Management                  fees and other                      |   |   | 39,000 |   |   | 121,800 |   |
|                                                                 |   |   | 72,000 |   |   | 176,600 |   |
|                                                                 |   |   |   |   |   |   |   |
| OPERATING                  COSTS AND EXPENSES:                       |   |   |   |   |   |   |   |
| Real                  estate operations                         |   |   | 165,900 |   |   | 70,200 |   |
| Mineral                  holding costs                          |   |   | 796,700 |   |   | 501,100 |   |
| General                  and administrative                     |   |   | 1,705,600 |   |   | 2,548,700 |   |
|                                                                 |   |   | 2,668,200 |   |   | 3,120,000 |   |
|                                                                 |   |   |   |   |   |   |   |
| LOSS                  BEFORE INVESTMENT AND                          |   |   |   |   |   |   |   |
| PROPERTY                  TRANSACTIONS                          |   |   | (2,596,200 | ) |   | (2,943,400 | ) |
|                                                                 |   |   |   |   |   |   |   |
| OTHER                  INCOME & (EXPENSES):                      |   |   |   |   |   |   |   |
| Gain                  on sales of assets                        |   |   | 1,000 |   |   | 2,414,900 |   |
| Gain                  on sale of marketable securities          |   |   | 737,400 |   |   | -- |   |
| Loss                  from valuation of derivatives             |   |   | -- |   |   | (585,400 | ) |
| Dividends                                                       |   |   | 2,900 |   |   | 2,800 |   |
| Interest                  income                                |   |   | 226,000 |   |   | 51,300 |   |
| Interest                  expense                               |   |   | (55,800 | ) |   | (29,500 | ) |
|                                                                 |   |   | 911,500 |   |   | 1,854,100 |   |
|                                                                 |   |   |   |   |   |   |   |
| LOSS                  BEFORE MINORITY INTEREST AND                   |   |   |   |   |   |   |   |
| BENEFIT                  FROM INCOME TAXES                      |   |   | (1,684,700 | ) |   | (1,089,300 | ) |
|                                                                 |   |   |   |   |   |   |   |
| MINORITY                  INTEREST IN LOSS OF                        |   |   |   |   |   |   |   |
| CONSOLIDATED                  SUBSIDIARIES                      |   |   | 18,200 |   |   | 4,200 |   |
|                                                                 |   |   |   |   |   |   |   |
| LOSS                  BEFORE BENEFIT FROM                            |   |   |   |   |   |   |   |
| INCOME                  TAXES                                   |   |   | (1,666,500 | ) |   | (1,085,100 | ) |
|                                                                 |   |   |   |   |   |   |   |
| BENEFIT                  FROM INCOME TAXES                           |   |   | 348,300 |   |   | -- |   |
|                                                                 |   |   |   |   |   |   |   |
| NET                  LOSS                                            |   | $ | (1,318,200 | ) | $ | (1,085,100 | ) |
|                                                                 |   |   |   |   |   |   |   |
| PER                  SHARE DATA                                      |   |   |   |   |   |   |   |
|  Net                  loss                                      |   | $ | (0.07 | ) | $ | (0.06 | ) |
|                                                                 |   |   |   |   |   |   |   |
| BASIC                  AND DILUTED WEIGHTED                          |   |   |   |   |   |   |   |
| AVERAGE                  SHARES OUTSTANDING                     |   |   | 19,413,931 |   |   | 18,127,158 |   |
|                                                                 |   |   |   |   |   |   |   |

----

| **U.S.                  ENERGY CORP. AND SUBSIDIARIES**              |   |
|----------------------------------------------------------------------|--------|
| **CONDENSED                  CONSOLIDATED STATEMENTS OF CASH FLOWS** |   |
| **(Unaudited)**                                                      |   |
|                                                                 |   |   |   |   |   |
|                                                                 |   | Three                  months ended March 31, |   |
|                                                                 |   | 2007 |   | 2006 |   |
| CASH                  FLOWS FROM OPERATING ACTIVITIES:               |   |   |   |   |   |
| Net                  loss                                            |   | $ | (1,318,200 | ) | $ | (1,085,100 | ) |
| Adjustments                  to reconcile net loss                   |   |   |   |   |   |   |   |
| to                  net cash used in operating activities:           |   |   |   |   |   |   |   |
| Minority                  interest in loss of                        |   |   |   |   |   |   |   |
| consolidated                  subsidiaries                      |   |   | (18,200 | ) |   | (4,200 | ) |
| Depreciation                                                         |   |   | 120,300 |   |   | 159,700 |   |
| Accretion                  of asset                                  |   |   |   |   |   |   |   |
| retirement                  obligations                         |   |   | 2,100 |   |   | 192,700 |   |
| Initial                  valuation of asset                          |   |   |   |   |   |   |   |
| retirement                  obligation                          |   |   | -- |   |   | 83,400 |   |
| Benefit                  from deferred tax assets                    |   |   | (348,300 | ) |   | -- |   |
| Gain                  on sale of assets                              |   |   | (1,000 | ) |   | (2,293,700 | ) |
| Loss                  on valuation of derivatives                    |   |   | -- |   |   | 585,400 |   |
| Gain                  on sale of marketable securities               |   |   | (737,300 | ) |   | -- |   |
| Noncash                  compensation                                |   |   | 128,400 |   |   | 358,800 |   |
| Noncash                  services                                    |   |   | -- |   |   | 325,600 |   |
| Net                  changes in assets and liabilities:              |   |   | (1,464,200 | ) |   | (76,500 | ) |
| NET                  CASH USED IN                                    |   |   |   |   |   |   |   |
| OPERATING                  ACTIVITIES                                |   |   | (3,636,400 | ) |   | (1,753,900 | ) |
|                                                                 |   |   |   |   |   |   |   |
| CASH                  FLOWS FROM INVESTING ACTIVITIES:               |   |   |   |   |   |   |   |
| Proceeds                  from sale of marketable securities         |   |   | 1,452,400 |   |   | -- |   |
| Acquisition                  of unproved mining claims               |   |   | (253,300 | ) |   | (9,200 | ) |
| Proceeds                  on sale of property and equipment          |   |   | 1,000 |   |   | 1,639,400 |   |
| Purchase                  of property and equipment                  |   |   | (51,700 | ) |   | (107,400 | ) |
| Net                  change in restricted investments                |   |   | (52,900 | ) |   | 500 |   |
| Proceeds                  on note receivable                         |   |   | 560,900 |   |   | -- |   |
| Net                  change in note receiable                        |   |   | -- |   |   | (30,600 | ) |
| Net                  change in investments in affiliates             |   |   | 34,700 |   |   | 44,200 |   |
| NET                  CASH PROVIDED BY                                |   |   |   |   |   |   |   |
| BY                  INVESTING ACTIVITIES                             |   |   | 1,691,100 |   |   | 1,536,900 |   |
|                                                                 |   |   |   |   |   |   |   |

----

| **U.S.                  ENERGY CORP. AND SUBSIDIARIES**              |   |
|----------------------------------------------------------------------|--------|
| **CONDENSED                  CONSOLIDATED STATEMENTS OF CASH FLOWS** |   |
|                                                                 |   |   |   |   |   |
|                                                                 |   | Three                  months ended March 31, |   |
|                                                                 |   | 2007 |   | 2006 |   |
| CASH                  FLOWS FROM FINANCING ACTIVITIES:               |   |   |   |   |   |
| Issuance                  of common stock                            |   | $ | 393,100 |   | $ | 908,500 |   |
| Proceeds                  from long term debt                        |   |   | 164,100 |   |   | 184,400 |   |
| Repayments                  of long term debt                        |   |   | (183,100 | ) |   | (110,800 | ) |
| NET                  CASH PROVIDED BY                                |   |   |   |   |   |   |   |
| FINANCING                  ACTIVITIES                                |   |   | 374,100 |   |   | 982,100 |   |
|                                                                 |   |   |   |   |   |   |   |
| NET                  (DECREASE) INCREASE IN                          |   |   |   |   |   |   |   |
| CASH                  AND CASH EQUIVALENTS                           |   |   | (1,571,200 | ) |   | 765,100 |   |
|                                                                 |   |   |   |   |   |   |   |
| CASH                  AND CASH EQUIVALENTS                           |   |   |   |   |   |   |   |
| AT                  BEGINNING OF PERIOD                              |   |   | 16,973,500 |   |   | 6,998,700 |   |
|                                                                 |   |   |   |   |   |   |   |
| CASH                  AND CASH EQUIVALENTS                           |   |   |   |   |   |   |   |
| AT                  END OF PERIOD                                    |   | $ | 15,402,300 |   | $ | 7,763,800 |   |
|                                                                 |   |   |   |   |   |   |   |
| SUPPLEMENTAL                  DISCLOSURES:                           |   |   |   |   |   |   |   |
| Income                  tax paid                                     |   | $ | -- |   | $ | -- |   |
|                                                                 |   |   |   |   |   |   |   |
| Interest                  paid                                       |   | $ | 55,800 |   | $ | 29,500 |   |
|                                                                 |   |   |   |   |   |   |   |
| NON-CASH                  INVESTING AND FINANCING ACTIVITIES:        |   |   |   |   |   |   |   |
| Acquisition                  of mining claims                        |   |   |   |   |   |   |   |
| through                  issuance of subsidiary stock                |   | $ | 33,700 |   | $ | -- |   |
|                                                                 |   |   |   |   |   |   |   |
| Acquisition                  of assets                               |   |   |   |   |   |   |   |
| through                  issuance of debt                            |   | $ | -- |   | $ | 80,700 |   |
|                                                                 |   |   |   |   |   |   |   |
| Satisfaction                  of receivable - employee               |   |   |   |   |   |   |   |
| with                  stock in company                               |   | $ | -- |   | $ | 30,600 |   |
|                                                                 |   |   |   |   |   |   |   |

----

**U.S.            ENERGY CORP. & SUBSIDIARIES**

**FIN      48 **

**FAS      157 **

*Considering      the Effects of Prior Year Misstatements when Quantifying Misstatements in      Current Year Financial Statements *

----

**U.S.            ENERGY CORP. & SUBSIDIARIES**

*The      Fair Value Option for Financial Assets and Financial Liabilities*

----

**U.S.              ENERGY CORP. & SUBSIDIARIES**

|                                           |   |   |       | Accumulated                       |   |                        |   |
|------------------------------------------------|--------|--------|------------|-----------------------------------|--------|-----------------------------|--------|
|                                           |   |   |       | Amortization                  and |   | Net                         |   |
|                                           |   | Cost   |       | Depreciation                      |   | Book                  Value |   |
|                                           |   |   |       |                              |   |                        |   |
| Mining                  properties             |   | $      | 848,600    |                              | $      | -                           |   | $ | 848,600 |   |
| Buildings,                  land and equipment |   |   | 10,826,700 |                              |   | (5,566,400                  | )      |   | 5,260,300 |   |
| Totals                                         |   | $      | 11,675,300 |                              | $      | (5,566,400                  | )      | $ | 6,108,900 |   |
|                                           |   |   |       |                              |   |                        |   |   |   |   |

|                                                      |   | Three                  months ending March 31, |       |
|-----------------------------------------------------------|--------|------------------------------------------------|------------|
|                                                      |   | 2007                                           |       | 2006 |   |
| Net                  loss                                 |   | $                                              | (1,318,200 | ) | $ | (1,085,100 | ) |
|                                                      |   |                                           |       |   |   |   |   |
| Comprehensive                  gain from the              |   |                                           |       |   |   |   |   |
| unrealized                  gain on marketable securities |   |                                           | --         |   |   | 353,300 |   |
|                                                      |   |                                           |       |   |   |   |   |
| Comprehensive                  loss                       |   | $                                              | (1,318,200 | ) | $ | (731,800 | ) |
|                                                      |   |                                           |       |   |   |   |   |

----

**U.S.              ENERGY CORP. & SUBSIDIARIES**

|                                                            |   | **March                  31,** |       | **December                  31,** |   |
|-----------------------------------------------------------------|--------|--------------------------------|------------|-----------------------------------|--------|
|                                                            |   | **2007**                       |       | **2006**                          |   |
| Deferred                  tax assets:                           |   |                           |       |                              |   |
| Deferred                  compensation                          |   | $                              | 370,200    |                              | $      | 589,000 |   |
| Accrued                  reclamation                            |   |                           | 925,500    |                              |   | 879,100 |   |
| Allowances                  for bad debts                       |   |                           | -          |                              |   | - |   |
| Tax                  basis in excess of book (Pinnacle Stock)   |   |                           | -          |                              |   | - |   |
| Net                  operating loss carryforwards               |   |                           | 15,045,800 |                              |   | 14,525,100 |   |
| Tax                  credits (AMT credit carryover)             |   |                           | 44,200     |                              |   | 44,200 |   |
| Non-deductible                  reserves and other              |   |                           | 2,900      |                              |   | 2,900 |   |
| Total                  deferred tax assets                      |   |                           | 16,388,600 |                              |   | 16,040,300 |   |
|                                                            |   |                           |       |                              |   |   |   |
| Deferred                  tax liabilities:                      |   |                           |       |                              |   |   |   |
| Book                  basis in excess of tax basis              |   |                           | (15,100    | )                                 |   | (179,900 | ) |
| Accrued                  reclamation                            |   |                           | (926,400   | )                                 |   | (926,400 | ) |
| Non-deductible                  reserves and other              |   |                           | (2,200     | )                                 |   | (2,200 | ) |
| Total                  deferred tax liabilities                 |   |                           | (943,700   | )                                 |   | (1,108,500 | ) |
|                                                            |   |                           |       |                              |   |   |   |
| Net                  deferred tax assets                        |   |                           | 15,444,900 |                              |   | 14,931,800 |   |
| Valuation                  allowance                            |   |                           | -          |                              |   | - |   |
| Deferred                  tax assets net of valuation allowance |   | $                              | 15,444,900 |                              | $      | 14,931,800 |   |
|                                                            |   |                           |       |                              |   |   |   |

----

**U.S.              ENERGY CORP. & SUBSIDIARIES**

| Current                  portion of long term debt for the purchase of aircraft, equipment                  and                  insurance policies at various interest rates and due dates |   | $      | 939,100   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|
|                                                                                                                                                                                        |   |   |      |   |
| Long                  term portion of debt for the purchase of aircraft, equipment and                  insurance                  policies at various interest rates and due dates         |   |   | 274,000   |   |
|                                                                                                                                                                                        |   | $      | 1,213,100 |   |

----

**U.S.              ENERGY CORP. & SUBSIDIARIES**

|                                     |   | Three                    months ending March 31, |    |
|------------------------------------------|--------|--------------------------------------------------|---------|
|                                     |   | 2007                                             |    | 2006 |   |
| Balance                    December 31,  |   | $                                                | 124,400 |   | $ | 5,902,200 |   |
| Addition                    to Liability |   |                                             | --      |   |   | 83,400 |   |
| Accretion                    Expense     |   |                                             | 2,100   |   |   | 192,700 |   |
| Balance                    March 31,     |   | $                                                | 126,500 |   | $ | 6,178,300 |   |
|                                     |   |                                             |         |   |   |   |   |

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**U.S.              ENERGY CORP. & SUBSIDIARIES**

|                                                 |   |                          |       |   |   | Additional |   |
|------------------------------------------------------|--------|-------------------------------|------------|--------|--------|------------|--------|
|                                                 |   | Common                  Stock |       |   |   | Paid-In    |   |
|                                                 |   | Shares                        |       | Amount |   | Capital    |   |
| Balance                  December 31, 2006           |   |                          | 19,659,591 |   | $      | 196,600    |   | $ | 72,990,700 |   |
|                                                 |   |                          |       |   |   |       |   |   |   |   |
| Stock                  issued to outside directors   |   |                          | 3,812      |   |   | --         |   |   | 18,000 |   |
|                                                 |   |                          |       |   |   |       |   |   |   |   |
| 2001                  stock compensation plan        |   |                          | 12,500     |   |   | 100        |   |   | 61,200 |   |
|                                                 |   |                          |       |   |   |       |   |   |   |   |
| Exercise                  of options                 |   |                          | 152,831    |   |   | 1,500      |   |   | 113,600 |   |
|                                                 |   |                          |       |   |   |       |   |   |   |   |
| Exercise                  of warrants                |   |                          | 81,893     |   |   | 800        |   |   | 277,300 |   |
|                                                 |   |                          |       |   |   |       |   |   |   |   |
| Expense                  of employee options vesting |   |                          | --         |   |   | --         |   |   | 6,000 |   |
|                                                 |   |                          |       |   |   |       |   |   |   |   |
| Forfeitable                  stock released for      |   |                          |       |   |   |       |   |   |   |   |
| an                  employee                         |   |                          | 112,680    |   |   | 1,200      |   |   | 660,200 |   |
|                                                 |   |                          | 20,023,307 |   | $      | 200,200    |   | $ | 74,127,000 |   |
|                                                 |   |                          |       |   |   |       |   |   |   |   |

----

**U.S.              ENERGY CORP. & SUBSIDIARIES**

----

**U.S.              ENERGY CORP. & SUBSIDIARIES**

**Subsequent      Events**

**Uranium      One Asset Purchase Agreement Closing (see Form 8K/A filed on May 7,      2007)**

| ·   | $750,000                cash (paid in advance on July 13, 2006) and recorded as a refundable                deposit. |
|--------------------|----------------------------------------------------------------------------------------------------------------------|

| ·   | 6,607,605                Uranium One common shares. On April 30, 2007, the Uranium One common                shares closed at CAD$16.65 per share on the TSX (approximately                USD$15.04). |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $6,606,000                cash, comprised of (i) $5,020,900 as a “UPC-Related Payment” to pay the                Company and Crested for transferring to Uranium One their contractual                rights with UPC; and (ii) $1,585,100 in reimbursements for the Company’s                and Crested’s property expenditures from July 10,                2006. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**U.S.              ENERGY CORP. & SUBSIDIARIES**

| **Revenues                    from sale of assets to sxr Uranium One**  |   |   |        |
|-------------------------------------------------------------------------|--------|--------|-------------|
| Release                    of refundable deposit                        |   | $      | 750,000     |   |
| Relief                    from Asset Retirement Obligations             |   |   | 6,527,200   |   |
| Relief                    from accrued holding costs on uranium mill    |   |   | 848,600     |   |
| sxr                    Uranium One purchase of UPC position             |   |   | 5,020,900   |   |
| Reimbursable                    Costs                                   |   |   | 1,585,100   |   |
| Receipt                    of sxr Uranium One common stock              |   |   | 99,400,600  |   |
|                                                                    |   |   |        |   |
|                                                                    |   |   | 114,132,400 |   |
|                                                                    |   |   |        |   |
| **Cost                    of sale of assets to sxr Uranium One**        |   |   |        |   |
| Mining                    Claims                                        |   |   | 1,535,500   |   |
| Property                    Plant and Equipment - net                   |   |   | 692,500     |   |
| Pro-ration                    of property taxes                         |   |   | 3,300       |   |
| Accrued                    costs from January 1, 2007 to April 30, 2007 |   |   | 172,900     |   |
|                                                                    |   |   |        |   |
|                                                                    |   |   | 2,404,200   |   |
|                                                                    |   |   |        |   |
| Net                    gain before income taxes                         |   |   | 111,728,200 |   |
|                                                                    |   |   |        |   |
| Provision                    for income taxes                           |   |   | 41,771,700  |   |
|                                                                    |   |   |        |   |
| Net                    gain on sale of assets to sxr Uranium One        |   | $      | 69,956,500  |   |
|                                                                    |   |   |        |   |

----

**U.S.              ENERGY CORP. & SUBSIDIARIES**

| ·   | Uranium                One has assumed certain specific liabilities associated with the                sold                assets, including (but not limited to) those future reclamation                liabilities associated with the Shootaring Canyon Mill in Utah, and                the                Sheep Mountain properties. The Company and Crested’s cash bonds in the                approximate amount of $6,883,300 will be released and the cash will                be                returned by the regulatory                authorities. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $20,000,000                cash when commercial production occurs at the Shootaring Canyon Mill                (when                the Shootaring Canyon Mill has been operating at 60% or more of its                design                capacity of 750 short tons per day for 60 consecutive                days). |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $7,500,000                  cash on the first delivery (after commercial production has occurred)                  of                  mineralized material from any of the claims sold to Uranium One                  on April                  30, 2007 (excluding existing ore stockpiles on the                  properties). |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| ·   | From                  and after the initiation of commercial production at the Shootaring                  Canyon                  Mill, a production payment royalty (up to but not more than $12,500,000)                  equal to five percent of (i) the gross value of uranium and vanadium                  products produced at and sold from the mill; or (ii) mill fees                  received by                  Uranium One from third parties for custom milling or tolling arrangements,                  as applicable. If production is sold to a Uranium One affiliate,                  partner,                  or joint venturer, gross value shall be determined by reference                  to mining                  industry publications or data. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**U.S.            ENERGY CORP. & SUBSIDIARIES**

----

**U.S.              ENERGY CORP. & SUBSIDIARIES**

**Lucky        Jack Molybdenum Property - Kobex Resources, Ltd. (See Form 8K filed on April        9,        2007)**

| Date                    by When Expenditures and Options Must be Paid(1) |   | Expenditures                    Amount(2)                    -                    $ |   | Option                    Payment Amount (3)                    -                    $ |   | Total                    Expenditure and Option PaymentAmount                    - $ |   | Cumulative                    Total for Expenditures Amounts and Option Payments - $ |
|--------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|
| Later                    of April 13, 2007 or TSX-V Approval(4)          |   |  -0-                                                                           |   |  750,000                                                                          |   |  750,000                                                                        |   |  750,000                                                                        |
| March                    31, 2008                                        |   | 3,500,000(5)                                                                        |   | 1,200,000(5)                                                                           |   | 4,200,000                                                                            |   | 4,950,000                                                                            |
| Dec.                    31, 2008                                         |   | 5,000,000                                                                           |   | 500,000                                                                                |   | 5,500,000                                                                            |   | 10,450,000                                                                           |
| Dec.                    31, 2009                                         |   | 5,000,000                                                                           |   | 500,000                                                                                |   | 5,500,000                                                                            |   | 15,950,000                                                                           |
| Dec.                    31, 2010                                         |   | 2,500,000                                                                           |   | 500,000                                                                                |   | 3,000,000                                                                            |   | 18,950,000                                                                           |
| Dec.                    31, 2011                                         |   | -0-                                                                                 |   | 500,000                                                                                |   | 500,000                                                                              |   | 19,450,000                                                                           |
| Totals                                                                   |   | 16,000,000                                                                          |   | 3,950,000                                                                              |   | 19,450,000                                                                           |   | 19,450,000                                                                           |

----

**U.S.              ENERGY CORP. & SUBSIDIARIES**

| (1)   | Any                shortfall in expenditures may be paid direct, in cash, to USECC.                Except                for the initial payment of $3,500,000 in expenditures by March 31,                2008                (which is a firm commitment of Kobex), if any expenditures amount                is not                fulfilled and/or option payment is not made by 90 days after the                due date,                the agreement will be deemed to have been terminated by Kobex. However,                if                Kobex fails to incur an expenditures amount and/or does not make                an option                payment after the date when Kobex has earned a 15% interest, U.S.                Moly                will replace Kobex as manager of the                property. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Expenditures                  include (but are not limited to) holding and permitting costs for                  the                  property; geological, geophysical, metallurgical, and related work;                  salaries and wages; and water treatment plant capital and operating                  costs. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | At                Kobex’ election, option payments may be made in cash or Kobex common stock                at market price on issue date. Kobex may accelerate these payments                in                advance of the scheduled dates. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (4)   | The                agreement is subject to approval by the TSX Venture Exchange. If                not                approved by July 2, 2007, the agreement will immediately terminate                unless                the parties agree otherwise. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (5)   | For                this period, Kobex may reduce the option payment by $700,000 by increasing                expenditures by that amount, or apportioning the $700,000 between                the                option payment and expenditures. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**U.S.              ENERGY CORP. & SUBSIDIARIES**

----

**ITEM      2. **
**Management's      Discussion and Analysis of Financial Condition and Results of      Operations**
**.**

**Overview      of Business**

**Uranium**

**Gold**

**Molybdenum**

----

**Forward      Looking Statements**

**Critical      Accounting Policies**

*Principles      of Consolidation*

----

*Cash      Equivalents *
**-      **

*Accounts      and Notes Receivable*

*Marketable      Securities *

*Mineral      Claims*

*Asset      Retirement Obligations*

----

*Assets      and Liabilities Held for Sale*

*Real      Estate Held for Sale*

*Revenue      Recognition*

*Income      Taxes*

*Use      of Accounting Estimates*

**Liquidity      and Capital Resources**

----

----

**Capital      Resources**

----

**Capital      Requirements**

**Maintaining      Mineral Properties**

**Uranium      Properties**

**Lucky      Jack Molybdenum Property**

**Sutter      Gold Mining Inc. Properties**

----

**Debt      Payments**

**Reclamation      Costs**

**InterWest**

----

**Other**

**Results      of Operations**

**Three      Months Ended March 31, 2007 compared to 2006**

----

**Three      Months Ended March 31, 2006 compared to 2005**

----

**Contractual      Obligations**

|                                         |   | Payments                  due by period |      |
|----------------------------------------------|--------|-----------------------------------------|-----------|
|                                         |   |                                    |      | Less |   | One                  to |   | Three                  to |   | More                  than |   |
|                                         |   |                                    |      | than                  one |   | Three |   | Five |   | Five |   |
|                                         |   | Total                                   |      | Year |   | Years |   | Years |   | Years |   |
| Long-term                  debt obligations  |   | $                                       | 1,213,100 |   | $ | 939,100 |   | $ | 261,800 |   | $ | 12,200 |   | $ | -- |   |
|                                         |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                  long-term liabilities |   |                                    | 126,500   |   |   | -- |   |   | -- |   |   | -- |   |   | 126,500 |   |
| Totals                                       |   | $                                       | 1,339,600 |   | $ | 939,100 |   | $ | 261,800 |   | $ | 12,200 |   | $ | 126,500 |   |
|                                         |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |

**ITEM        3. **
**Quantitative        and Qualitative Disclosures About Market Risk**

**ITEM        4. **
**Controls        and Procedures**

----

**PART        II. OTHER INFORMATION**

**ITEM        1. **
**Legal        Proceedings**

***Patent        Claims Litigation - Lucky Jack Molybdenum Property***

----

***Quiet        Title Litigation - Sutter Gold Mining Inc.***

**ITEM        1A.Risk        Factors**

**The        following risk factors should be considered in evaluating the information        in        this Form 10-Q. The reader should also consider risk factors discussed in        our        annual report for the year ended December 31, 2006 filed on Form        10-K.**

***We        may be classified as an inadvertent investment company***

----

**ITEM      2. **
**Changes      in Securities and Use of Proceeds**

**ITEM      3. **
**Defaults      Upon Senior Securities**

**ITEM      4. **
**Submission      of Matter to a Vote of Shareholders**

**ITEM      5. **
**Other      Information**

----

**ITEM      6. **
**Exhibits      and Reports on Form 8-K**

|   | (a)    | Exhibits.                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                   |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                   |
|   |   | 31.1                                                                                                                                                                                                       | Certification                of Chief Executive Officer Pursuant to Rule 13a-15(e) / Rule                15d-15(e)                                                                                                                                                     |
|   |   | 31.2                                                                                                                                                                                                       | Certification                of Chief Financial Officer Pursuant to Rule 13a-14(a) / Rule                15(e)/15d-15(e)                                                                                                                                               |
|   |   | 32.1                                                                                                                                                                                                       | Certification                of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as                adopted                by Section 906 of the Sarbanes-Oxley Act of 2002                                                                                  |
|   |   | 32.2                                                                                                                                                                                                       | Certification                of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as                adopted                by Section 906 of the Sarbanes-Oxley Act of 2002                                                                                  |
|   |   | 10.1                                                                                                                                                                                                       | Kobex                Agreement of 4-3-07 (without Exhibits)                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                   |
|   | (b)    | **Reports                on Form 8-K.**                The Company filed five reports on Form 8-K for the quarter ended                March 31,                2007. The events reported were as follows: |
|   |   |                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                   |
|   |   | 1.                                                                                                                                                                                                         | The                report filed on January 8, 2007, under Item 8.01 referenced the January                2,                2007 Amended Exclusivity Agreement between USECC and sxr Uranium                One.                                                       |
|   |   |                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                   |
|   |   | 2.                                                                                                                                                                                                         | The                report filed on January 24, 2007, under Items 1.01, 4.01 and 5.01                referenced the Plan and Agreement of Merger for Crested Corp. signed                1-23-07, Change of Accountant and Change of                Directors/Officers. |
|   |   |                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                   |
|   |   | 3.                                                                                                                                                                                                         | The                report filed on February 1, 2007, amending Item 4.01 of the 8-K filed                January 24, 2007.                                                                                                                                              |
|   |   |                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                   |
|   |   | 4.                                                                                                                                                                                                         | The                report filed on February 5, 2007, under Item 4.01 referencing the                engagement of Moss Adams LLP as independent                accountants.                                                                                            |
|   |   |                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                   |
|   |   | 5.                                                                                                                                                                                                         | The                report filed on February 23, 2007 under Item 1.01 referenced the                signing                of the Asset Purchase Agreement between USECC and sxr Uranium                One.                                                            |

----

**SIGNATURES**

|                              |   | U.S.                ENERGY CORP. |
|-----------------------------------|--------|----------------------------------|
|                              |   | (Company)                        |
|                              |   |                             |   |   |
|                              |   |                             |   |   |
|                              |   |                             |   |   |
| Date:                May 17, 2007 |   | By:                              | /s/                Keith G. Larsen |   |
|                              |   |                             | KEITH                G. LARSEN, |   |
|                              |   |                             | Chairman                and CEO |   |
|                              |   |                             |   |   |
|                              |   |                             |   |   |
|                              |   |                             |   |   |
|                              |   |                             |   |   |
| Date:                May 17, 2007 |   | By:                              | /s/                Robert Scott Lorimer |   |
|                              |   |                             | ROBERT                SCOTT LORIMER |   |
|                              |   |                             | Principal                Financial Officer and |   |
|                              |   |                             | Chief                Accounting Officer |   |

----