----

| x      | Quarterly                  report pursuant to section 13 or 15(d) of the Securities Exchange                  Act of                  1934  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------|
|   | For                  the quarter ended September 30, 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 8th                  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 |

----

**APPLICABLE        ONLY TO ISSUERS INVOLVED IN BANKRUPTCY**

**PROCEEDINGS        DURING THE PRECEDING FIVE YEARS**

| Class                                         |   | Outstanding                  Shares at November 13, 2007 |
|-----------------------------------------------|--------|----------------------------------------------------------|
| Common                  stock, $.01 par value |   | 21,087,396                                               |

----

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

**INDEX**

|                          |                                                                                                                                                                           | Page                  No.     |
|-------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------|
| **PART                  I.**  | **FINANCIAL                  INFORMATION**                                                                                                                                     |                          |
|                          |                                                                                                                                                                           |                          |
| ITEM                  1.      | Financial                  Statements.                                                                                                                                         |                          |
|                          |                                                                                                                                                                           |                          |
|                          | Condensed                  Consolidated Balance Sheets September 30, 2007 (unaudited) and                  December                  31, 2006 (unaudited)                      | 4-5                           |
|                          |                                                                                                                                                                           |                          |
|                          | Condensed                  Consolidated Statements of Operations for the Three and Nine Months                  Ended                  September 30, 2007 and 2006 (unaudited) | 6                             |
|                          |                                                                                                                                                                           |                          |
|                          | Condensed                  Consolidated Statements of Cash Flows for the Three and Nine Months                  Ended                  September 30, 2007 and 2006 (unaudited) | 7-9                           |
|                          |                                                                                                                                                                           |                          |
|                          | Notes                  to Condensed Consolidated Financial Statements (unaudited)                                                                                              | 10-23                         |
|                          |                                                                                                                                                                           |                          |
| ITEM                  2.      | Management’s                  Discussion and Analysis of Financial Condition and Results of                  Operations                                                  | 24-35                         |
|                          |                                                                                                                                                                           |                          |
| ITEM                  3.      | Quantitative                  and Qualitative Disclosures about Market Risk                                                                                                    | 36                            |
|                          |                                                                                                                                                                           |                          |
| ITEM                  4.      | Controls                  and Procedures                                                                                                                                       | 36                            |
|                          |                                                                                                                                                                           |                          |
| **PART                  II.** | **OTHER                  INFORMATION**                                                                                                                                         |                          |
|                          |                                                                                                                                                                           |                          |
| ITEM                  1.      | Legal                  Proceedings                                                                                                                                             | 37-38                         |
|                          |                                                                                                                                                                           |                          |
| ITEM                  1A.     | Risk                  Factors                                                                                                                                                  | 38-41                         |
|                          |                                                                                                                                                                           |                          |
|                          |                                                                                                                                                                           |                          |
| ITEM                  2.      | Changes                  in Securities and Use of Proceeds                                                                                                                     | 41-42                         |
|                          |                                                                                                                                                                           |                          |
| ITEM                  3.      | Defaults                  Upon Senior Securities                                                                                                                               | 42                            |
|                          |                                                                                                                                                                           |                          |
| ITEM                  4.      | Submission                  of Matters to a Vote of Shareholders                                                                                                               | 42                            |
|                          |                                                                                                                                                                           |                          |
| ITEM                  5.      | Other                  Information                                                                                                                                             | 42                            |
|                          |                                                                                                                                                                           |                          |
| ITEM                  6.      | Exhibits                  and Reports on Form 8-K                                                                                                                              | 42-43                         |
|                          |                                                                                                                                                                           |                          |
|                          | Signatures                                                                                                                                                                     | 44                            |
|                          |                                                                                                                                                                           |                          |
|                          | Certifications                                                                                                                                                                 | See                  Exhibits |

----

**PART        I.  FINANCIAL INFORMATION**

**ITEM        1.  Financial Statements**

| **U.S.                    ENERGY CORP. AND SUBSIDIARIES**    |   |
|--------------------------------------------------------------|--------|
| **CONDENSED                    CONSOLIDATED BALANCE SHEETS** |   |
| **ASSETS**                                                   |   |
| **(Unaudited)**                                              |   |
|                                                         |   |   |   |   |   |   |
|                                                         |   | September                    30, |   |   | December                    31, |   |
|                                                         |   | 2007 |   |   | 2006 |   |
| CURRENT                    ASSETS:                           |   |   |   |   |   |   |
| Cash                    and cash equivalents                 |   | $ | 6,821,600 |   |   | $ | 16,973,500 |   |
| Marketable                    securities                     |   |   |   |   |   |   |   |   |
| Held                    to maturity - treasury bills         |   |   | 71,274,000 |   |   |   | -- |   |
| Trading                    securities                        |   |   | -- |   |   |   | 123,400 |   |
| Available                    for sale securities             |   |   | 574,900 |   |   |   | 1,148,500 |   |
| Accounts                    receivable                       |   |   |   |   |   |   |   |   |
| Trade                                                        |   |   | 68,000 |   |   |   | 156,500 |   |
| Reimbursable                    project costs                |   |   | 781,500 |   |   |   | 188,400 |   |
| Dissolution                    of subsidiaries               |   |   | 218,600 |   |   |   | -- |   |
| Note                    receivable                           |   |   | -- |   |   |   | 560,500 |   |
| Assets                    held for sale                      |   |   | 2,932,200 |   |   |   | 11,506,000 |   |
| Deferred                    tax assets                       |   |   | 253,500 |   |   |   | 14,321,600 |   |
| Prepaid                    expenses and other current assets |   |   | 175,400 |   |   |   | 166,500 |   |
| Total                    current assets                      |   |   | 83,099,700 |   |   |   | 45,144,900 |   |
|                                                         |   |   |   |   |   |   |   |   |
| PROPERTIES                    AND EQUIPMENT:                 |   |   | 24,322,400 |   |   |   | 11,563,500 |   |
| Less                    accumulated depreciation,            |   |   |   |   |   |   |   |   |
| depletion                    and amortization                |   |   | (4,561,700 | ) |   |   | (5,454,200 | ) |
| Net                    properties and equipment              |   |   | 19,760,700 |   |   |   | 6,109,300 |   |
|                                                         |   |   |   |   |   |   |   |   |
| OTHER                    ASSETS:                             |   |   |   |   |   |   |   |   |
| Deferred                    tax assets                       |   |   | 457,700 |   |   |   | 610,200 |   |
| Deposits                    and other                        |   |   | 5,214,300 |   |   |   | 37,000 |   |
| Total                    other assets                        |   |   | 5,672,000 |   |   |   | 647,200 |   |
| Total                    assets                              |   | $ | 108,532,400 |   |   | $ | 51,901,400 |   |
|                                                         |   |   |   |   |   |   |   |   |

----

| **U.S.                    ENERGY CORP. AND SUBSIDIARIES**              |   |
|------------------------------------------------------------------------|--------|
| **CONDENSED                    CONSOLIDATED BALANCE SHEETS**           |   |
| **LIABILITIES                    AND SHAREHOLDERS' EQUITY**            |   |
| **(Unaudited)**                                                        |   |
|                                                                   |   |   |   |   |   |   |
|                                                                   |   | September                    30, |   |   | December                    31, |   |
|                                                                   |   | 2007 |   |   | 2006 |   |
| CURRENT                    LIABILITIES:                                |   |   |   |   |   |   |
| Accounts                    payable                                    |   | $ | 3,367,200 |   |   | $ | 1,115,000 |   |
| Accrued                    compensation expense                        |   |   | 761,800 |   |   |   | 1,190,200 |   |
| Dividends                    payable                                   |   |   | -- |   |   |   | -- |   |
| Income                    taxes payable                                |   |   | 1,569,700 |   |   |   | -- |   |
| Current                    portion of long-term debt                   |   |   | 78,600 |   |   |   | 937,200 |   |
| Liabilities                    held for sale                           |   |   | -- |   |   |   | 7,375,800 |   |
| Refundable                    deposits                                 |   |   | -- |   |   |   | 800,000 |   |
| Other                    current liabilities                           |   |   | 228,100 |   |   |   | 177,000 |   |
| Total                    current liabilities                           |   |   | 6,005,400 |   |   |   | 11,595,200 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| LONG-TERM                    DEBT, net of current portion              |   |   | 228,400 |   |   |   | 294,900 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| ASSET                    RETIREMENT OBLIGATIONS                        |   |   | 131,300 |   |   |   | 124,400 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| OTHER                    ACCRUED LIABILITIES                           |   |   | 1,051,000 |   |   |   | 462,700 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| MINORITY                    INTERESTS                                  |   |   | 8,391,900 |   |   |   | 4,700,200 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| COMMITMENTS                    AND CONTINGENCIES                       |   |   |   |   |   |   |   |   |
|                                                                   |   |   |   |   |   |   |   |   |
| FORFEITABLE                    COMMON STOCK,  $.01 par value |   |   |   |   |   |   |   |   |
| -0-                    and 297,540 shares issued, respectively         |   |   |   |   |   |   |   |   |
| forfeitable                    until earned                            |   |   | -- |   |   |   | 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; 21,161,805             |   |   |   |   |   |   |   |   |
| and                    19,659,591 shares issued net of                 |   |   |   |   |   |   |   |   |
| treasury                    stock, respectively                        |   |   | 211,600 |   |   |   | 196,600 |   |
| Additional                    paid-in capital                          |   |   | 79,152,900 |   |   |   | 72,990,700 |   |
| Accumulated                    surplus (deficit)                       |   |   | 16,017,000 |   |   |   | (39,101,900 | ) |
| Treasury                    stock at cost, 725,845 and 497,845         |   |   |   |   |   |   |   |   |
| shares,                    respectively                                |   |   | (1,970,800 | ) |   |   | (923,500 | ) |
| Unrealized                    (loss) gain on marketable securities     |   |   | (195,800 | ) |   |   | 306,000 |   |
| Unallocated                    ESOP contribution                       |   |   | (490,500 | ) |   |   | (490,500 | ) |
| Total                    shareholders' equity                          |   |   | 92,724,400 |   |   |   | 32,977,400 |   |
| Total                    liabilities and shareholders' equity          |   | $ | 108,532,400 |   |   | $ | 51,901,400 |   |
|                                                                   |   |   |   |   |   |   |   |   |

----

| **U.S.                    ENERGY CORP. AND SUBSIDIARIES**              |   |
|------------------------------------------------------------------------|--------|
| **CONDENSED                    CONSOLIDATED STATEMENTS OF OPERATIONS** |   |
| **(Unaudited)**                                                        |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                   |   | Three                    months ended September 30, |   |   | Nine                    months ended September 30, |   |
|                                                                   |   | 2007 |   |   | 2006 |   |   | 2007 |   |   | 2006 |   |
| OPERATING                    REVENUES:                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Real                    estate operations                              |   | $ | 582,500 |   |   | $ | 35,000 |   |   | $ | 766,600 |   |   | $ | 137,800 |   |
| Management                    fees and other                           |   |   | 24,300 |   |   |   | 246,100 |   |   |   | 165,300 |   |   |   | 468,200 |   |
|                                                                   |   |   | 606,800 |   |   |   | 281,100 |   |   |   | 931,900 |   |   |   | 606,000 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING                    COSTS AND EXPENSES:                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real                    estate operations                              |   |   | 81,400 |   |   |   | 85,200 |   |   |   | 250,400 |   |   |   | 221,500 |   |
| Mineral                    holding costs                               |   |   | 574,200 |   |   |   | 1,078,900 |   |   |   | 2,369,800 |   |   |   | 2,262,300 |   |
| General                    and administrative                          |   |   | 2,332,900 |   |   |   | 5,593,000 |   |   |   | 12,156,800 |   |   |   | 10,509,000 |   |
|                                                                   |   |   | 2,988,500 |   |   |   | 6,757,100 |   |   |   | 14,777,000 |   |   |   | 12,992,800 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LOSS                    BEFORE INVESTMENT AND                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| PROPERTY                    TRANSACTIONS                               |   |   | (2,381,700 | ) |   |   | (6,476,000 | ) |   |   | (13,845,100 | ) |   |   | (12,386,800 | ) |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER                    INCOME & (EXPENSES):                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gain                    on sales of assets                             |   |   | 139,800 |   |   |   | 240,000 |   |   |   | 1,962,000 |   |   |   | 3,063,500 |   |
| Loss                    on sale of marketable securities               |   |   | (2,227,000 | ) |   |   | (860,500 | ) |   |   | (8,318,400 | ) |   |   | (860,500 | ) |
| Gain                    on foreign exchange                            |   |   | (86,600 | ) |   |   | -- |   |   |   | 430,000 |   |   |   | -- |   |
| Gain                    on sale of uranium assets                      |   |   | -- |   |   |   | -- |   |   |   | 111,728,200 |   |   |   | -- |   |
| Loss                    from valuation of derivatives                  |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | (630,900 | ) |
| Loss                    from dissolution of subsidiaries               |   |   | (78,700 | ) |   |   | -- |   |   |   | (78,700 | ) |   |   | (3,845,800 | ) |
| Gain                    (loss) on sale of investment                   |   |   | -- |   |   |   | 10,869,800 |   |   |   | -- |   |   |   | 10,842,300 |   |
| Settlement                    of litigation                            |   |   | -- |   |   |   | (7,000,000 | ) |   |   | -- |   |   |   | (7,000,000 | ) |
| Dividends                                                              |   |   | 34,600 |   |   |   | 136,600 |   |   |   | 40,200 |   |   |   | 141,600 |   |
| Interest                    income                                     |   |   | 1,194,900 |   |   |   | 168,200 |   |   |   | 2,062,000 |   |   |   | 418,200 |   |
| Interest                    expense                                    |   |   | (14,100 | ) |   |   | (40,500 | ) |   |   | (63,800 | ) |   |   | (97,600 | ) |
|                                                                   |   |   | (1,037,100 | ) |   |   | 3,513,600 |   |   |   | 107,761,500 |   |   |   | 2,030,800 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME                    (LOSS) BEFORE MINORITY INTEREST,             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| AND                    PROVISION FOR INCOME TAXES                      |   |   | (3,418,800 | ) |   |   | (2,962,400 | ) |   |   | 93,916,400 |   |   |   | (10,356,000 | ) |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| MINORITY                    INTEREST IN (GAIN) LOSS OF                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CONSOLIDATED                    SUBSIDIARIES                           |   |   | 147,200 |   |   |   | 28,700 |   |   |   | (3,551,400 | ) |   |   | 76,300 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME                    (LOSS) BEFORE PROVISION                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BEFORE                    INCOME TAXES                                 |   |   | (3,271,600 | ) |   |   | (2,933,700 | ) |   |   | 90,365,000 |   |   |   | (10,279,700 | ) |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME                    TAXES:                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Current                    provision for                         |   |   | 1,995,200 |   |   |   | -- |   |   |   | (18,625,100 | ) |   |   | -- |   |
|  Deferred                    (provision for) benefit from         |   |   | 526,400 |   |   |   | -- |   |   |   | (14,512,700 | ) |   |   | -- |   |
|                                                                   |   |   | 2,521,600 |   |   |   | -- |   |   |   | (33,137,800 | ) |   |   | -- |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET                    INCOME (LOSS)                                   |   | $ | (750,000 | ) |   | $ | (2,933,700 | ) |   | $ | 57,227,200 |   |   | $ | (10,279,700 | ) |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| PER                    SHARE DATA                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                    earnings (loss) per share                     |   | $ | (0.04 | ) |   | $ | (0.16 | ) |   | $ | 2.86 |   |   | $ | (0.56 | ) |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                    earnings (loss) per share                   |   | $ | (0.04 | ) |   | $ | (0.16 | ) |   | $ | 2.61 |   |   | $ | (0.56 | ) |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BASIC                    WEIGHTED AVERAGE                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SHARES                    OUTSTANDING                                  |   |   | 20,558,882 |   |   |   | 18,367,198 |   |   |   | 20,024,465 |   |   |   | 18,283,573 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| DILUTED                    WEIGHTED AVERAGE                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SHARES                    OUTSTANDING                                  |   |   | 20,558,882 |   |   |   | 18,367,198 |   |   |   | 21,901,936 |   |   |   | 18,283,573 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| **U.S.                    ENERGY CORP. AND SUBSIDIARIES**              |   |
|------------------------------------------------------------------------|--------|
| **CONDENSED                    CONSOLIDATED STATEMENTS OF CASH FLOWS** |   |
| **(Unaudited)**                                                        |   |
|                                                                   |   |   |   |   |   |   |
|                                                                   |   | Nine                    months ended September 30, |   |
|                                                                   |   | 2007 |   |   | 2006 |   |
| CASH                    FLOWS FROM OPERATING ACTIVITIES:               |   |   |   |   |   |   |
| Net                    income (loss)                                   |   | $ | 57,227,200 |   |   | $ | (10,279,700 | ) |
| Adjustments                    to reconcile net income (loss)          |   |   |   |   |   |   |   |   |
| to                    net cash used in operating activities:           |   |   |   |   |   |   |   |   |
| Minority                    interest in loss of                        |   |   |   |   |   |   |   |   |
| consolidated                    subsidiaries                           |   |   | 3,551,400 |   |   |   | (76,300 | ) |
| Depreciation                                                           |   |   | 342,100 |   |   |   | 380,700 |   |
| Accretion                    of asset                                  |   |   |   |   |   |   |   |   |
| retirement                    obligations                              |   |   | 6,900 |   |   |   | 578,400 |   |
| Initial                    valuation of asset                          |   |   |   |   |   |   |   |   |
| retirement                    obligation                               |   |   | -- |   |   |   | 83,400 |   |
| Noncash                    interest income                             |   |   | (1,274,000 | ) |   |   | -- |   |
| Deferred                    income taxes                               |   |   | 14,512,700 |   |   |   | -- |   |
| Income                    tax payable                                  |   |   | 1,569,700 |   |   |   | -- |   |
| Gain                    on sale of assets to sxr                       |   |   | (111,728,100 | ) |   |   | -- |   |
| Gain                    on sale of assets                              |   |   | (1,962,000 | ) |   |   | (3,063,500 | ) |
| Gain                    on foreign exchange                            |   |   | (443,300 | ) |   |   | -- |   |
| Loss                    on valuation of Enterra units                  |   |   | -- |   |   |   | 3,845,800 |   |
| Loss                    on valuation of derivatives                    |   |   | -- |   |   |   | 630,900 |   |
| Gain                    on sale of Pinnacle Resources                  |   |   | -- |   |   |   | (10,842,300 | ) |
| Loss                    on sales of marketable securities              |   |   | 8,318,400 |   |   |   | 860,500 |   |
| Proceeds                    from the sale of trading securities        |   |   | -- |   |   |   | 8,304,300 |   |
| Warrant                    extension and repricing                     |   |   | 156,500 |   |   |   | 484,700 |   |
| Noncash                    compensation                                |   |   | 1,133,000 |   |   |   | 1,481,200 |   |
| Noncash                    services                                    |   |   | -- |   |   |   | 185,500 |   |
| Net                    changes in assets and liabilities:              |   |   | 488,400 |   |   |   | 1,295,300 |   |
| NET                    CASH USED IN                                    |   |   |   |   |   |   |   |   |
| OPERATING                    ACTIVITIES                                |   |   | (28,101,100 | ) |   |   | (6,131,100 | ) |
|                                                                   |   |   |   |   |   |   |   |   |

----

| **U.S.                    ENERGY CORP. AND SUBSIDIARIES**              |   |
|------------------------------------------------------------------------|--------|
| **CONDENSED                    CONSOLIDATED STATEMENTS OF CASH FLOWS** |   |
| **(Unaudited)**                                                        |   |
|                                                                   |   |   |   |   |   |   |
|                                                                   |   | Nine                    months ended September 30, |   |
|                                                                   |   | 2007 |   |   | 2006 |   |
| CASH                    FLOWS FROM INVESTING ACTIVITIES:               |   |   |   |   |   |   |
| Proceeds                    from sale of marketable securities         |   |   | 92,250,700 |   |   |   | 491,600 |   |
| Acquisition                    of unproved oil & gas properties    |   |   | (2,894,100 | ) |   |   | -- |   |
| Proceeds                    from sale of uranium assets                |   |   | 14,022,700 |   |   |   | -- |   |
| Acquisition                    of unproved mining claims               |   |   | (259,200 | ) |   |   | (644,800 | ) |
| Proceeds                    on sale of property and equipment          |   |   | 1,294,200 |   |   |   | 2,410,400 |   |
| Purchase                    of property and equipment                  |   |   | (5,586,700 | ) |   |   | (599,800 | ) |
| Proceeds                    from sale of investments                   |   |   | -- |   |   |   | 13,800,000 |   |
| Purchase                    of treasury bills                          |   |   | (70,000,000 | ) |   |   | -- |   |
| Purchase                    of real estate for development             |   |   | (6,595,200 | ) |   |   | -- |   |
| Net                    change in restricted investments                |   |   | -- |   |   |   | 8,100 |   |
| Net                    change in notes receivable                      |   |   | 560,500 |   |   |   | (20,200 | ) |
| Net                    change in investments in affiliates             |   |   | (79,500 | ) |   |   | 30,600 |   |
| NET                    CASH PROVIDED BY                                |   |   |   |   |   |   |   |   |
| BY                    INVESTING ACTIVITIES                             |   |   | 22,713,400 |   |   |   | 15,475,900 |   |
| CASH                    FLOWS FROM FINANCING ACTIVITIES:               |   |   |   |   |   |   |   |   |
| Issuance                    of common stock                            |   | $ | 2,284,100 |   |   | $ | 915,900 |   |
| Issuance                    of subsidiary stock                        |   |   | 342,000 |   |   |   | 3,173,700 |   |
| Deferred                    taxes from stock options                   |   |   | 1,415,400 |   |   |   | -- |   |
| Restricted                    cash for credit facility                 |   |   | (4,725,000 | ) |   |   | -- |   |
| Payment                    of cash dividend                            |   |   | (2,108,300 | ) |   |   | -- |   |
| Proceeds                    from long term debt                        |   |   | 164,100 |   |   |   | 184,300 |   |
| Repayments                    of long term debt                        |   |   | (1,089,200 | ) |   |   | (327,000 | ) |
| Purchase                    of treasury stock                          |   |   | (1,047,300 | ) |   |   | -- |   |
| NET                    CASH (USED IN) PROVIDED BY                      |   |   |   |   |   |   |   |   |
| FINANCING                    ACTIVITIES                                |   |   | (4,764,200 | ) |   |   | 3,946,900 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| NET                    (DECREASE) INCREASE IN                          |   |   |   |   |   |   |   |   |
| CASH                    AND CASH EQUIVALENTS                           |   |   | (10,151,900 | ) |   |   | 13,291,700 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| CASH                    AND CASH EQUIVALENTS                           |   |   |   |   |   |   |   |   |
|  AT                    BEGINNING OF PERIOD                        |   |   | 16,973,500 |   |   |   | 6,998,700 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| CASH                    AND CASH EQUIVALENTS                           |   |   |   |   |   |   |   |   |
| AT                    END OF PERIOD                                    |   | $ | 6,821,600 |   |   | $ | 20,290,400 |   |
|                                                                   |   |   |   |   |   |   |   |   |

----

| **U.S.                    ENERGY CORP. AND SUBSIDIARIES**              |   |
|------------------------------------------------------------------------|--------|
| **CONDENSED                    CONSOLIDATED STATEMENTS OF CASH FLOWS** |   |
| **(Unaudited)**                                                        |   |
|                                                                   |   |   |   |   |   |   |
|                                                                   |   | Nine                    months ended September 30, |   |
|                                                                   |   | 2007 |   |   | 2006 |   |
| SUPPLEMENTAL                    DISCLOSURES:                           |   |   |   |   |   |   |
| Income                    tax paid                                     |   | $ | 15,640,000 |   |   | $ | -- |   |
|                                                                   |   |   |   |   |   |   |   |   |
| Interest                    paid                                       |   | $ | 63,800 |   |   | $ | 97,600 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| NON-CASH                    INVESTING AND FINANCING ACTIVITIES:        |   |   |   |   |   |   |   |   |
| Issuance                    of subsidiary stock to acquire             |   |   |   |   |   |   |   |   |
| mining                    claims                                       |   | $ | 33,700 |   |   | $ | -- |   |
|                                                                   |   |   |   |   |   |   |   |   |
| Receipt                    of marketable securities from               |   |   |   |   |   |   |   |   |
| the                    sale of assets                                  |   | $ | 99,400,600 |   |   | $ | -- |   |
|                                                                   |   |   |   |   |   |   |   |   |
| Acquisition                    of assets                               |   |   |   |   |   |   |   |   |
| through                    issuance of debt                            |   | $ | -- |   |   | $ | 355,800 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| Satisfaction                    of receivable - employee               |   |   |   |   |   |   |   |   |
| with                    stock in company                               |   | $ | -- |   |   | $ | 30,600 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| Conversion                    of Enterra shares                        |   |   |   |   |   |   |   |   |
| to                    tradable units                                   |   | $ | -- |   |   | $ | 13,880,100 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| Issuance                    of stock warrants in                       |   |   |   |   |   |   |   |   |
| conjunction                    with agreements                         |   | $ | -- |   |   | $ | 727,300 |   |
|                                                                   |   |   |   |   |   |   |   |   |
| Unrealized                    loss/gain                                |   | $ | 195,800 |   |   | $ | 42,200 |   |
|                                                                   |   |   |   |   |   |   |   |   |

----

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

**Notes              to Condensed Consolidated Financial Statements              (Unaudited)**

**1)**
**Basis        of Presentation**

**2)**
**Principles        of Consolidation**

----

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

**Notes              to Condensed Consolidated Financial Statements (Unaudited)**

**3)**
**Recent        Accounting Pronouncements**

**FIN        48  **

**FAS        157  **

**FAS        159**
*The Fair        Value Option for Financial Assets and Financial Liabilities *

**4)**
**Stock        Based Compensation**

**Stock        Options -**

----

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

**Notes              to Condensed Consolidated Financial Statements (Unaudited)**

**Forfeitable        Shares **

**5)**
**Properties        and Equipment**

|                                                   |   |   |       |   | Accumulated                      |   |       |                          |   |
|--------------------------------------------------------|--------|--------|------------|--------|----------------------------------|--------|------------|-------------------------------|--------|
|                                                   |   |   |       |   | Amortization                     |   |       |                          |   |
|                                                   |   |   |       |   | Depletion                    and |   |       | Net                           |   |
|                                                   |   | Cost   |       |   | Depreciation                     |   |       | Book                    Value |   |
|                                                   |   |   |       |   |                             |   |       |                          |   |
|  Oil                    & Gas properties      |   | $      | 2,894,100  |   |                             | $      | -          |                          |   | $ | 2,894,100 |   |
|  Mining                    properties             |   |   | 823,600    |   |                             |   | -          |                          |   |   | 823,600 |   |
|  Buildings,                    land and equipment |   |   | 20,604,700 |   |                             |   | (4,561,700 | )                             |   |   | 16,043,000 |   |
|  Totals                                           |   | $      | 24,322,400 |   |                             | $      | (4,561,700 | )                             |   | $ | 19,760,700 |   |
|                                                   |   |   |       |   |                             |   |       |                          |   |   |   |   |

**6)**
**Marketable        Securities**

----

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

**Notes              to Condensed Consolidated Financial Statements (Unaudited)**

|                                                 |   |   |    |   |   |       |    | Unrealized  |   |
|------------------------------------------------------|--------|--------|---------|--------|--------|------------|---------|-------------|--------|
|                                                 |   | Cost   |    |   | Value  |       |    | Gain/(Loss) |   |
|                                                 |   |   |    |   |   |       |    |        |   |
| Held                    to maturity - treasury bills |   |   |    |   | $      | 71,274,000 |    |        |   |   |
|                                                 |   |   |    |   |   |       |    |        |   |   |
| Available                    for sale securities     |   |   |    |   |   |       |    |        |   |   |
| Kobex                    shares                      |   | $      | 703,600 |   |   | $          | 339,000 |        |   | $ | (364,600 | ) |
| Premier                    shares                    |   |   | 195,300 |   |   |       | 235,900 |        |   |   | 40,600 |   |
|                                                 |   | $      | 898,900 |   |   | $          | 574,900 |        |   | $ | (324,000 | ) |
|                                                 |   |   |    |   |   |       |    |        |   |   |   |   |

**7)           **
**Other        Comprehensive Income (Loss)**

|                                                        |                                      |   | Nine                    months ending September 30, |     |
|-------------------------------------------------------------|-------------------------------------------|--------|-----------------------------------------------------|----------|
|                                                        |                                      |   | 2007                                                |     |   | 2006 |   |
| Net                    gain/(loss)                          |                                      | $      | 57,227,200                                          |     |   | $ | (10,279,700 | ) |
|                                                        |                                      |   |                                                |     |   |   |   |   |   |
| Comprehensive                    loss from the              |                                      |   |                                                |     |   |   |   |   |
| unrealized                    loss on marketable securities |                                      |   | (324,000                                            | )        |   |   | (127,000 | ) |
|                                                        |                                      |   |                                                |     |   |   |   |   |   |
| Reclassification                    adjustment for gains    |                                      |   |                                                |     |   |   |   |   |
|                                                        | included                    in net income |   |                                                | (305,100 | ) |   |   | -- |   |
|                                                        |                                      |   |                                                |     |   |   |   |   |   |
| Deferred                    income taxes on                 |                                      |   |                                                |     |   |   |   |   |
|                                                        | marketable                    securities  |   |                                                | 127,300  |   |   |   | -- |   |
| Other                    comprehensive loss                 |                                      |   | (501,800                                            | )        |   |   | (127,000 | ) |
| Comprehensive                    gain/(loss)                |                                      | $      | 56,725,400                                          |     |   | $ | (10,406,700 | ) |
|                                                        |                                      |   |                                                |     |   |   |   |   |   |

----

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

**Notes              to Condensed Consolidated Financial Statements (Unaudited)**

**8)**
**Income        Taxes**

|                                                                                               |   | Three                    Months       |       |   | Nine                    Months        |   |
|----------------------------------------------------------------------------------------------------|--------|---------------------------------------|------------|--------|---------------------------------------|--------|
|                                                                                               |   | Ended                                 |       |   | Ended                                 |   |
|                                                                                               |   | September                    30, 2007 |       |   | September                    30, 2007 |   |
| Consolidated                    book income before income tax                                      |   | $                                     | (3,271,600 | )      |                                  | $      | 90,365,000 |   |
| Equity                    income from non consolidated tax sub                                     |   | $                                     | (160,100   | )      |                                  | $      | 3,551,400 |   |
| Add                    back losses from non consolidated tax subs                                  |   | $                                     | 391,300    |   |                                  | $      | 1,545,400 |   |
| Prior                    year true-up and rate change                                              |   | $                                     | (265,100   | )      |                                  | $      | (265,100 | ) |
| Permanent                    differences                                                           |   | $                                     | (1,755,600 | )      |                                  | $      | (1,517,300 | ) |
| Taxable                    income before temporary differences                                     |   | $                                     | (5,061,100 | )      |                                  | $      | 93,679,400 |   |
|                                                                                               |   |                                  |       |   |                                  |   |   |   |
| Expected                    federal income tax expense (benefit)35%                                |   | $                                     | (1,771,500 | )      |                                  | $      | 32,787,800 |   |
|                                                                                               |   |                                  |       |   |                                  |   |   |   |
| Federal                    deferred income tax expense (benefit)                                   |   | $                                     | (526,400   | )      |                                  | $      | 14,512,700 |   |
|       Federal                    current expense (benefit)           |   |                                  | (1,245,200 | )      |                                  | $      | 18,275,100 |   |
| Total                    federal income tax expense (benefit)                                      |   |                                  | (1,771,600 | )      |                                  | $      | 32,787,800 |   |
| Current                    state income tax expense net of                                         |   |                                  |       |   |                                  |
|           federal                    tax benefit |   |                                  | (750,000   | )      |                                  |   | 350,000 |   |
|        Total                    provision (benefit)             |   | $                                     | (2,521,600 | )      |                                  | $      | 33,137,800 |   |
|                                                                                               |   |                                  |       |   |                                  |   |   |   |

----

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

**Notes              to Condensed Consolidated Financial Statements (Unaudited)**

|                                                  |   | September                    30, |    |   | December                    31, |   |
|-------------------------------------------------------|--------|----------------------------------|---------|--------|---------------------------------|--------|
|                                                  |   | 2007                             |    |   | 2006                            |   |
| Deferred                    tax assets:               |   |                             |    |   |                            |   |
| Deferred                    compensation              |   | $                                | 468,900 |   |                            | $      | 589,000 |   |
| Accrued                    reclamation                |   |                             | 37,900  |   |                            |   | 879,100 |   |
| Allowances                    for bad debts           |   |                             |    |   |                            |   | - |   |
| Tax                    basis in excess of book        |   |                             | 202,000 |   |                            |   | - |   |
| Net                    operating loss carry forwards  |   |                             |    |   |                            |   | 14,525,100 |   |
| Tax                    credits (AMT credit carryover) |   |                             |    |   |                            |   | 44,200 |   |
| Non-deductible                    reserves and other  |   |                             | 253,500 |   |                            |   | 2,900 |   |
| Total                    deferred tax assets          |   |                             | 962,300 |   |                            |   | 16,040,300 |   |
|                                                  |   |                             |    |   |                            |   |   |   |
| Deferred                    tax liabilities:          |   |                             |    |   |                            |   |   |   |
|                                                  |   |                             |    |   |                            |   |   |   |
| Book                    basis in excess of tax basis  |   |                             | 251,100 |   |                            |   | 179,900 |   |
| Accrued                    reclamation                |   |                             |    |   |                            |   | 926,400 |   |
| Non-deductible                    reserves and other  |   |                             |    |   |                            |   | 2,200 |   |
| Total                    deferred tax liabilities     |   |                             | 251,100 |   |                            |   | 1,108,500 |   |
|                                                  |   |                             |    |   |                            |   |   |   |
| Net                    deferred tax assets            |   |                             | 711,200 |   |                            |   | 14,931,800 |   |
| Valuation                    allowance                |   |                             |    |   |                            |   |   |   |
| Net                    deferred tax assets            |   | $                                | 711,200 |   |                            |   | 14,931,800 |   |
|                                                  |   |                             |    |   |                            |   |   |   |

----

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

**Notes              to Condensed Consolidated Financial Statements (Unaudited)**

**9)     Sale        of Marketable Securities**

**10)   Earnings        Per Share**

**11)  **
**Long        term debt**

|  Current                    Portion of Long Term Debt |   | $      | 78,600  |   |
|------------------------------------------------------------|--------|--------|---------|--------|
|                                                       |   |   |    |   |
|  Long                    Term Portion of Debt         |   |   | 228,400 |   |
|                                                       |   | $      | 307,000 |   |
|                                                       |   |   |    |   |

**12)   Asset        Retirement Obligations**

----

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

**Notes              to Condensed Consolidated Financial Statements (Unaudited)**

|                                     |   | Nine                    months ending September 30, |    |
|------------------------------------------|--------|-----------------------------------------------------|---------|
|                                     |   | 2007                                                |    |   | 2006 |   |
| Balance                    December 31,  |   | $                                                   | 124,400 |   |   | $ | 5,902,200 |   |
| Addition                    to Liability |   |                                                | --      |   |   |   | 83,400 |   |
| Accretion                    Expense     |   |                                                | 6,900   |   |   |   | 578,400 |   |
| Balance                    September 30, |   | $                                                   | 131,300 |   |   | $ | 6,564,000 |   |
|                                     |   |                                                |    |   |   |   |   |   |

**13)  Shareholders’        Equity**

**Stock        Option Plans**

**Warrants        to Others**

----

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

**Notes              to Condensed Consolidated Financial Statements (Unaudited)**

|                                                                           |   | September                    30, 2007          |       |
|--------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------|------------|
|                                                                           |   | Employee                    Stock Options                                                   |       |   | Stock                    Purchase Warrants |   |
|                                                                           |   |                                                                                        |       |   | Weighted |   |   |   |   |   | Weighted |   |
|                                                                           |   |                                                                                        |       |   | Average |   |   |   |   |   | Average |   |
|                                                                           |   |                                                                                        |       |   | Exercise |   |   |   |   |   | Exercise |   |
|                                                                           |   | Options                                                                                     |       |   | Price |   |   | Warrants |   |   | Price |   |
| Outstanding                    at beginning                                    |   |                                                                                        |       |   |   |   |   |   |   |   |   |   |
| Outstanding                    balance at December 31, 2006                    |   |                                                                                        | 3,927,880  |   |   | $ | 2.92 |   |   |   | 1,821,323 |   |   | $ | 3.57 |   |
| Granted                                                                        |   |                                                                                        | 1,558,000  |   |   | $ | 4.97 |   |   |   | 31,215 |   |   | $ | 3.29 |   |
| Forfeited                                                                      |   |                                                                                        | (25,000    | ) |   | $ | 4.97 |   |   |   | - |   |   | $ | - |   |
| Expired                                                                        |   |                                                                                        | -          |   |   | $ | - |   |   |   | - |   |   | $ | - |   |
| Exercised                                                                      |   |                                                                                        | (1,259,542 | ) |   | $ | 2.58 |   |   |   | (186,147 | ) |   | $ | 3.13 |   |
| Outstanding                    at September 30, 2007                           |   |                                                                                        | 4,201,338  |   |   | $ | 3.77 |   |   |   | 1,666,391 |   |   | $ | 3.61 |   |
| Exercisable                    at September 30, 2007                           |   |                                                                                        | 2,643,338  |   |   | $ | 3.07 |   |   |   | 1,666,391 |   |   | $ | 3.61 |   |
|                                                                           |   |                                                                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                    Average Remaining Contractual Life - Years         |   |                                                                                        |       |   |   |   | 7.05 |   |   |   |   |   |   |   | 2.3 |   |
|                                                                           |   |                                                                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Aggregate                    intrinsic value of options / warrants outstanding |   |                                                                                        |       |   |   | $ | 3,581,200 |   |   |   |   |   |   | $ | 1,615,800 |   |
|                                                                           |   |                                                                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |

**Common        Stock**

----

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

**Notes              to Condensed Consolidated Financial Statements (Unaudited)**

|                                                             |   |                            |       |   |    |   |    | 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            |   |                            | 42,500     |   |    |   | 400     |       |   |   | 228,200 |   |
|                                                             |   |                            |       |   |    |   |    |       |   |   |   |   |
|  Exercise                    of options                     |   |                            | 977,015    |   |    |   | 9,800   |       |   |   | 1,684,300 |   |
|                                                             |   |                            |       |   |    |   |    |       |   |   |   |   |
|  Exercise                    of warrants                    |   |                            | 186,147    |   |    |   | 1,800   |       |   |   | 588,200 |   |
|                                                             |   |                            |       |   |    |   |    |       |   |   |   |   |
|  Value                    of company warrants issued and    |   |                            |       |   |    |   |    |       |   |   |   |   |
|       extended                     |   |                            | -          |   |    |   | -       |       |   |   | 116,300 |   |
|                                                             |   |                            |       |   |    |   |    |       |   |   |   |   |
|  Expense                    of employee options             |   |                            |       |   |    |   |    |       |   |   |   |   |
|       vesting                      |   |                            | -          |   |    |   | -       |       |   |   | 346,000 |   |
|                                                             |   |                            |       |   |    |   |    |       |   |   |   |   |
|  Forfeitable                    stock released to a former  |   |                            |       |   |    |   |    |       |   |   |   |   |
|       employee                     |   |                            | 112,680    |   |    |   | 1,200   |       |   |   | 660,200 |   |
|                                                             |   |                            |       |   |    |   |    |       |   |   |   |   |
|  Forfeitable                    stock released to current   |   |                            |       |   |    |   |    |       |   |   |   |   |
|       employees                    |   |                            | 180,060    |   |    |   | 1,800   |       |   |   | 1,105,600 |   |
|                                                             |   |                            |       |   |    |   |    |       |   |   |   |   |
|  Deferred                    taxes on FAS 123R compensation |   |                            | -          |   |    |   | -       |       |   |   | 1,415,400 |   |
|                                                             |   |                            |       |   |    |   |    |       |   |   |   |   |
|                                                             |   |                            | 21,161,805 |   |    | $      | 211,600 |       |   | $ | 79,152,900 |   |
|                                                             |   |                            |       |   |    |   |    |       |   |   |   |   |

**Equity        Compensation**

**14)  Real        Estate Investment**

----

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

**Notes              to Condensed Consolidated Financial Statements (Unaudited)**

**15)  Crested        Acquisition**

----

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

**Notes              to Condensed Consolidated Financial Statements (Unaudited)**

**16)   Sutter        Gold Mining, Inc.**

**17)  Uranium        One Asset Purchase Agreement Closing**

| **Proceeds                    from sale of assets to 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     |   |
| Uranium                    One purchase of UPC position                 |   |   | 5,020,900   |   |
| Reimbursable                    Costs                                   |   |   | 1,585,100   |   |
| Receipt                    of Uranium One common stock                  |   |   | 99,400,600  |   |
|                                                                    |   |   |        |   |
|                                                                    |   |   | 114,132,400 |   |
|                                                                    |   |   |        |   |
| **Cost                    of sale of assets to 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 Uranium One            |   | $      | 69,956,500  |   |
|                                                                    |   |   |        |   |

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

**Notes              to Condensed Consolidated Financial Statements (Unaudited)**

**18)  Cash        Dividend on Common Stock**

**19)  Common        Stock Buy Back Program**

**20)  Payment        of Cash Bonus, and Related Matters**

**21)**
**Lucky        Jack Molybdenum Property - Kobex Resources, Ltd**

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

**Notes              to Condensed Consolidated Financial Statements (Unaudited)**

**22)  Oil        and Gas Exploration Activities**

**23)  Subsequent        Event**

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

**Forward        Looking Statements**

**Overview        of Business**

**Recent        Developments**

**Sale        of Uranium Assets**

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**Stock      Buy Back Plan**

**Dividend**

**Lucky      Jack Molybdenum Property – Kobex Resources, Ltd.**

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**Oil      and Gas Development**

**Remington      Village**

**Mineral      Prices**

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**Results      of Operations**

**Three      and Nine Months Ended September 30, 2007 compared with the Three and Nine Months      Ended September 30, 2006**

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**Liquidity      and Capital Resources**

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**Capital      Resources**

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**Capital      Requirements**

----

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**Stock      Buy Back Program.**

|                                               |   | 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  |   | $                                       | 307,000 |   |   | $ | 78,600 |   |   | $ | 228,000 |   |   | $ | 400 |   |   |   | - |   |
|                                               |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Other                  long-term liabilities |   |                                    | 131,300 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 131,300 |   |
|  Totals                                       |   | $                                       | 438,300 |   |   | $ | 78,600 |   |   | $ | 228,000 |   |   | $ | 400 |   |   | $ | 131,300 |   |
|                                               |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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**Critical      Accounting Policies**

*Principles      of Consolidation*

*Cash      Equivalents *
**- **

*Accounts      and Notes Receivable*

*Marketable      Securities *

*Mineral      Claims *
*and Oil and Gas Properties*

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*Asset      Retirement Obligations*

*Real      Estate Held for Sale*

*Revenue      Recognition*

*Income      Taxes*

*Use      of Accounting Estimates*

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

**ITEM      4.  Controls and Procedures**

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**PART      II.  OTHER INFORMATION**

**ITEM      1.  Legal Proceedings**

***Water      Rights Litigation – Lucky Jack Molybdenum      Property***

| *1.  * | *Concerning                the Application for Water Rights of Virgil and Lee Spann Ranches,                Inc.*, *Case No. 03CW033, 03CW034, 03CW035, 03CW036 and                03CW037.*  These related cases involve the Spann Ranches,                Inc.’s Water Court applications to change the point of diversion through                alternative points for the purpose of rotating a portion of their                senior                water rights between ditches to maximize beneficial use in the event                of a                major downstream senior call.  MEMCO filed Statements of                Opposition to ensure that the final decrees to be issued by the Water                Court contain terms and conditions sufficient to protect MEMCO’s water                rights from material injury.  These cases are pending, and the                Company is awaiting proposed decrees from Applicant Spann Ranches,                Inc.                for consideration. |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *2.  * | *Concerning                the Application for Water Rights of the Town of Crested                Butte,**Case No. 02CW63.*  This case involved an                application filed by the Town of Crested Butte to provide for an                alternative point of diversion.  MEMCO filed a Statement of                Opposition to ensure that the final decree to be issued by the Water                Court                contains terms and conditions sufficient to protect MEMCO’s water rights                from material injury.  The Town of Crested Butte and USECC                reached a settlement and signed a Stipulation to protect USECC’s water                rights pursuant to a proposed final decree.  This Stipulation                has been signed by the Water Referee and was approved by the Water                Court                on September 5, 2007.  This case is now                closed. |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *3.  * | *Concerning                the Application of the**United State**s of America**in the**Gunnison** **River**,**Gunnison** **County**,* *Case                No. 99CW267*.  This case involves an application filed by                the United States of America to appropriate 0.033 cubic feet per                second of                water for wildlife use and for incidental irrigation of riparian                vegetation at the Mt. Emmons Iron Bog Spring, located in the vicinity                of                the Lucky Jack property.  MEMCO filed a Statement of Opposition                to protect proposed mining operations against any adverse impacts                by the                water requirements of the Iron Bog on such operations.  This                case is pending while the parties attempt to reach a settlement on                the                proposed decree terms and                conditions. |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| *4.* | *Concerning                the Application for Water Rights of the United States of America                for                Quantification of Reserved Right for Black Canyon of Gunnison National                Park*, *Case No. 01CW05.*  This case involves an                application filed by the United States of America to make absolute                conditional water rights claimed in the Gunnison River in relation                to the                Black Canyon of the Gunnison National Park for, and to quantify in-stream                flows for the protection and reproduction of fish and to preserve                the                recreational, scenic and aesthetic conditions.  MEMCO and over                350 other parties filed Statements of Opposition to protect their                existing                water rights.  On August 3, 2007, the Parties signed a                Stipulation recognizing USECC and most other Opposers position is                that the                flows claimed by the United States should be subordinated to the                historical operations of the federally owned and operated Aspinall                Unit,                and are subject to the provisions contained in the Aspinall Unit                Subordination Agreement between the federal government and water                districts                which protect junior water users in the Upper Gunnison River                Basin.  This Stipulation has been submitted to the Water Court                for approval.  USECC’s water rights will be protected by this                Stipulation and there is no need for USECC to be an active participant                in                future proceedings in this case, which will involve quantification                of the                in-stream flows claimed the United States of America for the Black                Canyon                Park. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

*USECC Gold Limited Liability Company vs. Nevada-Wabash      Mining Compa*
*ny, et al*

**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.**

***Risks      Associated with Entry into New Areas of Business***
**.**

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***Possible      Need for Added Capital***
*. *

***No      recurring business revenues and uncertainties associated with transaction-based      revenues.***
* *

***Uncertainties      in the val***
***ue of the mineral      properties***

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***Compliance      with environmental regulations may be costly***

***We      depend on key personnel***

***We      will seek additional business activities***
**.**
** **

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

***Proposed      Federal Legislation***

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

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|                                                           |   | Number                     |    |   | Average                    |   |   | Total                  shares |   |   | Maximum                          |   |
|----------------------------------------------------------------|--------|----------------------------|---------|--------|----------------------------|--------|--------|-------------------------------|--------|--------|----------------------------------|--------|
|                                                           |   | of                  shares |    |   | per                  share |   |   | purchased                     |   |   | value                  of shares |   |
|  Period                                                   |   | purchased                  |    |   | price                      |   |   | under                  plan   |   |   | to                  be purchased |   |
|  July                  1, through July 31, 2007           |   |                       | -       |   |                       | $      | -      |                          |   |   | -                                |   |   | $ | 5,000,000 |   |
|                                                           |   |                       |    |   |                       |   |   |                          |   |   |                             |   |   |   |   |   |
|  August                  1, through August 31, 2007       |   |                       | 100,000 |   |                       | $      | 4.70   |                          |   |   | 100,000                          |   |   | $ | 4,530,000 |   |
|                                                           |   |                       |    |   |                       |   |   |                          |   |   |                             |   |   |   |   |   |
|  September                  1, through September 30, 2007 |   |                       | 128,000 |   |                       | $      | 4.51   |                          |   |   | 228,000                          |   |   | $ | 3,952,700 |   |
|                                                           |   |                       |    |   |                       |   |   |                          |   |   |                             |   |   |   |   |   |
|  Totals                                                   |   |                       | 228,000 |   |                       | $      | 4.54   |                          |   |   |                             |   |   |   |   |   |
|                                                           |   |                       |    |   |                       |   |   |                          |   |   |                             |   |   |   |   |   |

**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 |

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|   | (b)    | **Reports                on Form 8-K.**  The Company filed three reports on Form                8-K for the quarter ended September 30, 2007.  The events                reported were as follows: |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                   |   |
|   |   | 1.                                                                                                                                                                                                                     | The                report filed on July 5, 2007, under Item 8.01 referenced the cash                dividend, stock buy back program and Exploration and Area of Mutual                Interest Agreement. |
|   |   |                                                                                                                                                                                                                   |   |
|   |   | 2.                                                                                                                                                                                                                     | The                report filed on July 30, 2007, under Item 8.01 referenced final sale                of                sxr Uranium One stock. |
|   |   |                                                                                                                                                                                                                   |   |
|   |   | 3.                                                                                                                                                                                                                     | The                report filed on August 6, 2007, under Item 1.01 referenced the First                Amendment to Plan and Agreement of                Merger. |

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**SIGNATURES**

|                                   |   | U.S.                ENERGY CORP. |
|----------------------------------------|--------|----------------------------------|
|                                   |   | (Company)                        |
|                                   |   |                             |   |   |
|                                   |   |                             |   |   |
|                                   |   |                             |   |   |
| Date:                November 13, 2007 |   | By:                              | /s/                Keith G. Larsen |   |
|                                   |   |                             | KEITH                G. LARSEN, |   |
|                                   |   |                             | Chairman                and CEO |   |
|                                   |   |                             |   |   |
|                                   |   |                             |   |   |
|                                   |   |                             |   |   |
|                                   |   |                             |   |   |
| Date:                November 13, 2007 |   | By:                              | /s/                Robert Scott Lorimer |   |
|                                   |   |                             | ROBERT                SCOTT LORIMER |   |
|                                   |   |                             | Principal                Financial Officer and |   |
|                                   |   |                             | Chief                Accounting Officer |   |

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