----

| x      | Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934  |
|--------|------------------------------------------------------------------------------------------|
|   | For the quarter ended June 30, 2011 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 registrant 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)          |
|                                                |   |                |
| Registrant's telephone number, including area code: |   | (307) 856-9271      |

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

----

| Large accelerated filer    o                                                  | Accelerated filer    x |
|---------------------------------------------------------------------------------------------------|--------------------------------------------|
| Non-accelerated filer   o  (Do not check if a smaller reporting company) | Smaller reporting company o                |

----

|     |                                                                                                                  | Page No.     |
|----------|-----------------------------------------------------------------------------------------------------------------------|--------------|
| PART I.  | FINANCIAL INFORMATION                                                                                                 |         |
|     |                                                                                                                  |         |
| Item 1.  | Financial Statements.                                                                                                 |         |
|     |                                                                                                                  |         |
|     | Condensed Consolidated Balance Sheets as of June 30, 2011 (unaudited) and December 31, 2010 (unaudited)               | 4-5          |
|     |                                                                                                                  |         |
|     | Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2011 and 2010 (unaudited) | 6-7          |
|     |                                                                                                                  |         |
|     | Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2011 and 2010 (unaudited)           | 8-9          |
|     |                                                                                                                  |         |
|     | Notes to Condensed Consolidated Financial Statements (unaudited)                                                      | 10-23        |
|     |                                                                                                                  |         |
| Item 2.  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                           | 24-41        |
|     |                                                                                                                  |         |
| Item 3.  | Quantitative and Qualitative Disclosures About Market Risk                                                            | 41-42        |
|     |                                                                                                                  |         |
| Item 4.  | Controls and Procedures                                                                                               | 42           |
|     |                                                                                                                  |         |
| PART II. | OTHER INFORMATION                                                                                                     |         |
|     |                                                                                                                  |         |
| Item 1.  | Legal Proceedings                                                                                                     | 43-44        |
|     |                                                                                                                  |         |
| Item 1A. | Risk Factors                                                                                                          | 44           |
|     |                                                                                                                  |         |
| Item 2.  | Unregistered Sales of Equity Securities and Use of Proceeds                                                           | 45           |
|     |                                                                                                                  |         |
| Item 3.  | Defaults Upon Senior Securities                                                                                       | 45           |
|     |                                                                                                                  |         |
| Item 4.  | Submission of Matters to a Vote of Security Holders                                                                   | 45           |
|     |                                                                                                                  |         |
| Item 5.  | Other Information                                                                                                     | 45           |
|     |                                                                                                                  |         |
| Item 6.  | Exhibits and Reports on Form 8-K                                                                                      | 46           |
|     |                                                                                                                  |         |
|     | Signatures                                                                                                            | 46           |
|     |                                                                                                                  |         |
|     | Certifications                                                                                                        | See Exhibits |

----

| U.S. ENERGY CORP.                                |   |
|--------------------------------------------------|--------|
| CONDENSED CONSOLIDATED BALANCE SHEETS            |   |
| ASSETS                                           |   |
| (Unaudited)                                      |   |
| (In thousands)                                   |   |
|                                             |   |   |   |   |   |   |
|                                             |   | June 30, |   |   | December 31, |   |
|                                             |   | 2011 |   |   | 2010 |   |
| CURRENT ASSETS:                                  |   |   |   |   |   |   |
| Cash and cash equivalents                        |   | $ | 7,751 |   |   | $ | 5,812 |   |
| Marketable securities                            |   |   |   |   |   |   |   |   |
| Held to maturity - treasuries                    |   |   | 1,106 |   |   |   | 17,843 |   |
| Available for sale securities                    |   |   | 937 |   |   |   | 1,364 |   |
| Accounts receivable                              |   |   |   |   |   |   |   |   |
| Trade                                            |   |   | 3,821 |   |   |   | 3,890 |   |
| Reimbursable project costs                       |   |   | 408 |   |   |   | 114 |   |
| Income taxes                                     |   |   | 104 |   |   |   | 104 |   |
| Assets held for sale                             |   |   | 20,979 |   |   |   | 20,979 |   |
| Other current assets                             |   |   | 467 |   |   |   | 456 |   |
| Total current assets                             |   |   | 35,573 |   |   |   | 50,562 |   |
|                                             |   |   |   |   |   |   |   |   |
| INVESTMENT                                       |   |   | 2,705 |   |   |   | 2,834 |   |
|                                             |   |   |   |   |   |   |   |   |
| PROPERTIES AND EQUIPMENT:                        |   |   |   |   |   |   |   |   |
| Oil & gas properties under full cost method, |   |   |   |   |   |   |   |   |
| net of $20,469 and $14,563 accumulated           |   |   |   |   |   |   |   |   |
| depletion, depreciation and amortization         |   |   | 88,696 |   |   |   | 70,374 |   |
| Undeveloped mining claims                        |   |   | 20,771 |   |   |   | 21,077 |   |
| Property, plant and equipment, net               |   |   | 9,069 |   |   |   | 9,336 |   |
| Net properties and equipment                     |   |   | 118,536 |   |   |   | 100,787 |   |
|                                             |   |   |   |   |   |   |   |   |
| OTHER ASSETS                                     |   |   | 2,021 |   |   |   | 1,833 |   |
| Total assets                                     |   | $ | 158,835 |   |   | $ | 156,016 |   |
|                                             |   |   |   |   |   |   |   |   |

----

| U.S. ENERGY CORP.                              |   |
|------------------------------------------------|--------|
| CONSOLIDATED BALANCE SHEETS                    |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY           |   |
| (Unaudited)                                    |   |
| (In thousands, except shares)                  |   |
|                                           |   |   |   |   |   |   |
|                                           |   | June 30, |   |   | December 31, |   |
|                                           |   | 2011 |   |   | 2010 |   |
| CURRENT LIABILITIES:                           |   |   |   |   |   |   |
| Accounts payable                               |   | $ | 10,148 |   |   | $ | 14,830 |   |
| Accrued compensation                           |   |   | 801 |   |   |   | 1,669 |   |
| Commodity risk management liability            |   |   | 827 |   |   |   | 1,725 |   |
| Current portion of debt                        |   |   | 200 |   |   |   | 200 |   |
| Liabilities held for sale                      |   |   | 10,236 |   |   |   | 323 |   |
| Other current liabilities                      |   |   | 55 |   |   |   | 16 |   |
| Total current liabilities                      |   |   | 22,267 |   |   |   | 18,763 |   |
|                                           |   |   |   |   |   |   |   |   |
| LONG-TERM DEBT, net of current portion         |   |   | 3,400 |   |   |   | 400 |   |
|                                           |   |   |   |   |   |   |   |   |
| DEFERRED TAX LIABILITY                         |   |   | 3,142 |   |   |   | 5,015 |   |
|                                           |   |   |   |   |   |   |   |   |
| ASSET RETIREMENT OBLIGATIONS                   |   |   | 447 |   |   |   | 303 |   |
|                                           |   |   |   |   |   |   |   |   |
| OTHER ACCRUED LIABILITIES                      |   |   | 895 |   |   |   | 847 |   |
|                                           |   |   |   |   |   |   |   |   |
| SHAREHOLDERS' EQUITY:                          |   |   |   |   |   |   |   |   |
| Common stock, $.01 par value; unlimited shares |   |   |   |   |   |   |   |   |
| authorized; 27,239,391 and 27,068,610          |   |   |   |   |   |   |   |   |
| shares issued, respectively                    |   |   | 272 |   |   |   | 271 |   |
| Additional paid-in capital                     |   |   | 121,616 |   |   |   | 121,062 |   |
| Accumulated surplus                            |   |   | 6,429 |   |   |   | 8,713 |   |
| Unrealized gain on marketable securities       |   |   | 367 |   |   |   | 642 |   |
| Total shareholders' equity                     |   |   | 128,684 |   |   |   | 130,688 |   |
| Total liabilities and shareholders' equity     |   | $ | 158,835 |   |   | $ | 156,016 |   |
|                                           |   |   |   |   |   |   |   |   |

----

| U.S. ENERGY CORP.                                             |   |
|---------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS               |   |
| (Unaudited)                                                   |   |
| (In thousands except per share data)                          |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                          |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
|                                                          |   | 2011 |   |   | 2010 |   |   | 2011 |   |   | 2010 |   |
| REVENUES:                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Oil and gas                                                   |   | $ | 7,025 |   |   | $ | 6,218 |   |   | $ | 13,704 |   |   | $ | 13,927 |   |
| Realized (loss) on risk management activities                 |   |   | (1,015 | ) |   |   | -- |   |   |   | (1,570 | ) |   |   | -- |   |
| Unrealized gain on risk management activities                 |   |   | 2,138 |   |   |   | -- |   |   |   | 897 |   |   |   | -- |   |
|                                                          |   |   | 8,148 |   |   |   | 6,218 |   |   |   | 13,031 |   |   |   | 13,927 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING EXPENSES:                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Oil and gas                                                   |   |   | 1,955 |   |   |   | 1,498 |   |   |   | 6,034 |   |   |   | 2,628 |   |
| Oil and gas depreciation, depletion and amortization          |   |   | 3,120 |   |   |   | 2,396 |   |   |   | 5,905 |   |   |   | 4,651 |   |
| Water treatment plant                                         |   |   | 498 |   |   |   | 459 |   |   |   | 927 |   |   |   | 808 |   |
| Mineral holding costs                                         |   |   | 37 |   |   |   | (5 | ) |   |   | 80 |   |   |   | 52 |   |
| General and administrative                                    |   |   | 2,138 |   |   |   | 2,167 |   |   |   | 4,549 |   |   |   | 4,835 |   |
|                                                          |   |   | 7,748 |   |   |   | 6,515 |   |   |   | 17,495 |   |   |   | 12,974 |   |
| OPERATING (LOSS) INCOME                                       |   |   | 400 |   |   |   | (297 | ) |   |   | (4,464 | ) |   |   | 953 |   |
| OTHER INCOME AND (EXPENSES):                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gain on the sale of assets                                    |   |   | 137 |   |   |   | -- |   |   |   | 137 |   |   |   | 115 |   |
| Equity gain/(loss) in unconsolidated investment               |   |   | (65 | ) |   |   | 179 |   |   |   | (129 | ) |   |   | 1,142 |   |
| Gain on sale of marketable securities                         |   |   | 9 |   |   |   | 8 |   |   |   | 9 |   |   |   | 8 |   |
| Miscellaneous income and (expenses)                           |   |   | (37 | ) |   |   | (50 | ) |   |   | (38 | ) |   |   | (80 | ) |
| Interest income                                               |   |   | 10 |   |   |   | 2 |   |   |   | 30 |   |   |   | 61 |   |
| Interest expense                                              |   |   | (115 | ) |   |   | (18 | ) |   |   | (138 | ) |   |   | (35 | ) |
|                                                          |   |   | (61 | ) |   |   | 121 |   |   |   | (129 | ) |   |   | 1,211 |   |
| (LOSS) INCOME BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS |   |   | 339 |   |   |   | (176 | ) |   |   | (4,593 | ) |   |   | 2,164 |   |

----

| U.S. ENERGY CORP.                               |   |
|-------------------------------------------------|--------|
| CONSOLIDATED STATEMENTS OF OPERATIONS           |   |
| (Unaudited)                                     |   |
| (In thousands except per share data)            |   |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                            |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
|                                            |   | 2011 |   |   | 2010 |   |   | 2011 |   |   | 2010 |   |
| Income taxes:                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Deferred benefit from (provision for)     |   |   | (618 | ) |   |   | 17 |   |   |   | 1,976 |   |   |   | (871 | ) |
|                                            |   |   | (618 | ) |   |   | 17 |   |   |   | 1,976 |   |   |   | (871 | ) |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (LOSS) INCOME FROM CONTINUING OPERATIONS        |   |   | (279 | ) |   |   | (159 | ) |   |   | (2,617 | ) |   |   | 1,293 |   |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| DISCONTINUED OPERATIONS                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discontinued operations, net of taxes           |   |   | 204 |   |   |   | 28 |   |   |   | 333 |   |   |   | 103 |   |
| DISCONTINUED OPERATIONS                         |   |   | 204 |   |   |   | 28 |   |   |   | 333 |   |   |   | 103 |   |
| NET (LOSS) INCOME                               |   | $ | (75 | ) |   | $ | (131 | ) |   | $ | (2,284 | ) |   | $ | 1,396 |   |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET (LOSS) INCOME PER SHARE                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) income from continuing operations, basic |   | $ | (0.01 | ) |   | $ | -- |   |   | $ | (0.09 | ) |   | $ | 0.05 |   |
| Income from discontinued operations, basic      |   |   | 0.01 |   |   |   | -- |   |   |   | 0.01 |   |   |   | -- |   |
| Net (loss) income, basic                        |   | $ | -- |   |   | $ | -- |   |   | $ | (0.08 | ) |   | $ | 0.05 |   |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) from continuing operations, diluted      |   | $ | (0.01 | ) |   | $ | -- |   |   | $ | (0.09 | ) |   | $ | 0.05 |   |
| Income from discontinued operations, diluted    |   |   | 0.01 |   |   |   | -- |   |   |   | 0.01 |   |   |   | -- |   |
| Net (loss) income, diluted                      |   | $ | -- |   |   | $ | -- |   |   | $ | (0.08 | ) |   | $ | 0.05 |   |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                           |   |   | 27,220,049 |   |   |   | 26,734,636 |   |   |   | 27,203,336 |   |   |   | 26,611,583 |   |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                                         |   |   | 27,866,544 |   |   |   | 26,734,636 |   |   |   | 27,203,336 |   |   |   | 27,813,215 |   |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| U.S. ENERGY CORP.                                                             |   |
|-------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                               |   |
| (Unaudited)                                                                   |   |
|                                                                          |   |   |   |   |   |   |
|                                                                          |   | (In thousands) |   |
|                                                                          |   | For the six months ended June 30, |   |
|                                                                          |   | 2011 |   |   | 2010 |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                         |   |   |   |   |   |   |
| Net (loss) income                                                             |   | $ | (2,284 | ) |   | $ | 1,396 |   |
| (Income) from discontinued operations                                         |   |   | (333 | ) |   |   | (103 | ) |
| (Loss) income from continuing operations                                      |   |   | (2,617 | ) |   |   | 1,293 |   |
| Adjustments to reconcile net (loss) income to net cash provided by operations |   |   |   |   |   |
| Depreciation, depletion & amortization                                    |   |   | 6,206 |   |   |   | 4,935 |   |
| Change in fair value of commodity price                                       |   |   |   |   |   |   |   |   |
| risk management activities, net                                               |   |   | (897 | ) |   |   | -- |   |
| Accretion of discount on treasury investment                                  |   |   | (21 | ) |   |   | (34 | ) |
| Gain on sale of marketable securities                                         |   |   | (9 | ) |   |   | (8 | ) |
| Equity (gain)/loss from Standard Steam                                        |   |   | 129 |   |   |   | (1,142 | ) |
| Net change in deferred income taxes                                           |   |   | (1,725 | ) |   |   | 944 |   |
| (Gain) on sale of assets                                                      |   |   | (137 | ) |   |   | (115 | ) |
| Noncash compensation                                                          |   |   | 758 |   |   |   | 752 |   |
| Noncash services                                                              |   |   | (16 | ) |   |   | 30 |   |
| Net changes in assets and liabilities                                         |   |   | 373 |   |   |   | 311 |   |
| NET CASH PROVIDED BY OPERATING ACTIVITIES                                     |   |   | 2,044 |   |   |   | 6,966 |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                         |   |   |   |   |   |   |   |   |
| Net redemption (investment in) treasury investments                           |   |   | 16,758 |   |   |   | (12,332 | ) |
| Cash distributions from Standard Steam                                        |   |   | -- |   |   |   | 1,138 |   |
| Acquisition & development of oil & gas properties                     |   |   | (29,780 | ) |   |   | (23,734 | ) |
| Acquisition & development of mining properties                            |   |   | (48 | ) |   |   | (32 | ) |
| Acquisition of property and equipment                                         |   |   | (44 | ) |   |   | (444 | ) |
| Proceeds from sale of marketable securities                                   |   |   | 11 |   |   |   | 13 |   |
| Proceeds from sale of property and equipment                                  |   |   | 147 |   |   |   | 118 |   |
| Net change in restricted investments                                          |   |   | (206 | ) |   |   | (22 | ) |
| NET CASH USED IN INVESTING ACTIVITIES                                         |   |   | (13,162 | ) |   |   | (35,295 | ) |
|                                                                          |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                         |   |   |   |   |   |   |   |   |
| Issuance of common stock                                                      |   |   | (186 | ) |   |   | 503 |   |
| Proceeds from new debt                                                        |   |   | 13,069 |   |   |   | -- |   |
| Repayments of debt                                                            |   |   | (61 | ) |   |   | -- |   |
| NET CASH PROVIDED BY FINANCING ACTIVITIES                                     |   |   | 12,822 |   |   |   | 503 |   |
|                                                                          |   |   |   |   |   |   |   |   |

----

| U.S. ENERGY CORP.                                                    |   |
|----------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                      |   |
| (Unaudited)                                                          |   |
|                                                                 |   |   |   |   |   |   |
|                                                                 |   | (In thousands) |   |
|                                                                 |   | For the six months ended June 30, |   |
|                                                                 |   | 2011 |   |   | 2010 |   |
| Net cash provided by operating activities of discontinued operations |   |   | 241 |   |   |   | 557 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| Net cash used in investing activities of discontinued operations     |   |   | (6 | ) |   |   | (22 | ) |
| NET INCREASE (DECREASE) IN  CASH AND CASH EQUIVALENTS      |   |   | 1,939 |   |   |   | (27,291 | ) |
|                                                                 |   |   |   |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                     |   |   | 5,812 |   |   |   | 33,403 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD                           |   | $ | 7,751 |   |   | $ | 6,112 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES:                                            |   |   |   |   |   |   |   |   |
| Interest paid                                                        |   | $ | 90 |   |   | $ | 11 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| NON-CASH INVESTING AND FINANCING ACTIVITIES:                         |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |
| Unrealized gain                                                      |   | $ | 367 |   |   | $ | 196 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| Acquisition and development of oil and gas                           |   |   |   |   |   |   |   |   |
| properties through accounts payable                                  |   | $ | 5,687 |   |   | $ | 458 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| Acquisition and development of oil and gas                           |   |   |   |   |   |   |   |   |
| through asset retirement obligations                                 |   | $ | 134 |   |   | $ | 14 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| Amounts receivable from the release of                               |   |   |   |   |   |   |   |   |
| funds held in escrow                                                 |   | $ | 354 |   |   | $ | -- |   |
|                                                                 |   |   |   |   |   |   |   |   |

----

----

----

----

| U.S. Energy Corp.                        |   |
|------------------------------------------|--------|
| Components of Properties & Equipment |   |
|                                     |   |   |   |   |   |   |
|                                     |   | (In thousands) |   |
|                                     |   | June 30, |   |   | December 31, |   |
|                                     |   | 2011 |   |   | 2010 |   |
|  Oil & Gas properties           |   |   |   |   |   |   |
|  Unevaluated                        |   | $ | 25,303 |   |   | $ | 17,926 |   |
|  Wells in progress                  |   |   | 5,325 |   |   |   | 3,694 |   |
|  Evaluated                          |   |   | 78,537 |   |   |   | 63,317 |   |
|                                     |   |   | 109,165 |   |   |   | 84,937 |   |
|  Less accumulated depreciation      |   |   |   |   |   |   |   |   |
|  depletion and amortization         |   |   | (20,469 | ) |   |   | (14,563 | ) |
|  Net book value                     |   |   | 88,696 |   |   |   | 70,374 |   |
|                                     |   |   |   |   |   |   |   |   |
|  Mining properties                  |   |   | 20,771 |   |   |   | 21,077 |   |
|                                     |   |   |   |   |   |   |   |   |
|  Building, land and equipment       |   |   | 14,561 |   |   |   | 14,564 |   |
|  Less accumulated depreciation      |   |   | (5,492 | ) |   |   | (5,228 | ) |
|  Net book value                     |   |   | 9,069 |   |   |   | 9,336 |   |
|  Totals                             |   | $ | 118,536 |   |   | $ | 100,787 |   |
|                                     |   |   |   |   |   |   |   |   |

----

----

|                                          |   | (In thousands) |   |
|-----------------------------------------------|--------|----------------|--------|
|                                          |   | June 30,       |   |   | December 31, |   |
|                                          |   | 2011           |   |   | 2010 |   |
|  Costs associated with Mount Emmons      |   |           |   |   |   |   |
|  beginning of year                       |   | $              | 21,077 |   |   | $ | 21,969 |   |
|  Development costs during the six months |   |           | 48     |   |   |   | 108 |   |
|  Option payment from Thompson Creek      |   |           | (354   | ) |   |   | (1,000 | ) |
|  Costs at the end of the period          |   | $              | 20,771 |   |   | $ | 21,077 |   |
|                                          |   |           |   |   |   |   |   |   |

----

|                                  |   | (In thousands) |   |
|---------------------------------------|--------|----------------|--------|
|                                  |   | June 30,       |   |   | December 31, |   |
|                                  |   | 2011           |   |   | 2010 |   |
| Beginning asset retirement obligation |   | $              | 303    |   |   | $ | 211 |   |
| Accretion of discount                 |   |           | 10     |   |   |   | 17 |   |
| Liabilities incurred                  |   |           | 134    |   |   |   | 75 |   |
| Ending asset retirement obligation    |   | $              | 447    |   |   | $ | 303 |   |
|                                  |   |           |   |   |   |   |   |   |
| Mining properties                     |   | $              | 144    |   |   | $ | 139 |   |
| Oil & Gas Wells                   |   |           | 303    |   |   |   | 164 |   |
| Ending asset retirement obligation    |   | $              | 447    |   |   | $ | 303 |   |
|                                  |   |           |   |   |   |   |   |   |

|                       |              |      |   | Quantity |   |         |   |   |   |
|----------------------------|-------------------|-----------|--------|----------|--------|--------------|--------|--------|--------|
| Settlement Period          | Counterparty      | Basis     |   | (Bbl/d)  |   | Strike Price |   |
|                       |              |      |   |     |   |         |   |   |   |
| Crude Oil Costless Collars |              |      |   |     |   |         |   |   |   |
| 10/01/10 - 09/30/11        |  BNP Paribas |  WTI |   |     | 200    |         | Put:   |   | $      | 75.00 |   |
|                       |              |      |   |     |   |         | Call:  |   | $      | 83.25 |   |
|                       |              |      |   |     |   |         |   |   |   |   |   |
| Crude Oil Swaps            |              |      |   |     |   |         |   |   |   |   |   |
| 10/01/10 - 09/30/11        |  BNP Paribas |  WTI |   |     | 200    |         | Fixed: |   | $      | 79.05 |   |
| 01/01/11 - 12/31/11        |  BNP Paribas |  WTI |   |     | 200    |         | Fixed: |   | $      | 89.60 |   |

----

|                      |              |   | Fair Value at |   |
|---------------------------|-------------------|--------|---------------|--------|
| Underlying                | Location on       |   | June 30,      |   |
| Commodity                 | Balance Sheet     |   | 2011          |   |
|                      |              |   |          |   |
| Crude oil costless collar | Current Liability |   | $             | 245    |   |
| Crude oil swap #1         | Current Liability |   |          | 314    |   |
| Crude oil swap #2         | Current Liability |   |          | 268    |   |
|                      |              |   | $             | 827    |   |
|                      |              |   |          |   |   |

| ·   | Level 1 - Unadjusted quoted prices are available in active markets for identical assets or liabilities. |
|--------------------|---------------------------------------------------------------------------------------------------------|

| ·   | Level 2 - Pricing inputs, other than quoted prices within Level 1, which are either directly or indirectly observable. |
|--------------------|------------------------------------------------------------------------------------------------------------------------|

| ·   | Level 3 - Pricing inputs that are unobservable requiring the Company to use valuation methodologies that result in management’s best estimate of fair value. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                |   | (In thousands) |   |
|-------------------------------------|--------|----------------|--------|
|                                |   |           |   |   | Fair Value Measurements at June 30, 2011 Using |   |
|                                |   | June 30        |   |   | Quoted Prices in Active Markets for Identical Assets |   |   | Significant Other Observable Inputs |   |   | Significant Unobservable Inputs |   |
| Description                         |   | 2011           |   |   | (Level 1) |   |   | (Level 2) |   |   | (Level 3) |   |
|                                |   |           |   |   |   |   |   |   |   |   |   |   |
| Available for sale securities       |   | $              | 1,106  |   |   | $ | 1,106 |   |   | $ | -- |   |   | $ | -- |   |
| Assets held for sale                |   |           | 20,979 |   |   |   | -- |   |   |   | -- |   |   |   | 20,979 |   |
|                                |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total assets                        |   | $              | 22,085 |   |   | $ | 1,106 |   |   | $ | -- |   |   | $ | 20,979 |   |
|                                |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodity risk management liability |   | $              | 827    |   |   | $ | -- |   |   | $ | 827 |   |   | $ | -- |   |
| Liabilities held for sale           |   |           | 226    |   |   |   | -- |   |   |   | 226 |   |   |   | -- |   |
| Other accrued liabilities           |   |           | 895    |   |   |   | -- |   |   |   | -- |   |   |   | 895 |   |
|                                |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                               |   | $              | 1,948  |   |   | $ | -- |   |   | $ | 1,053 |   |   | $ | 895 |   |
|                                |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                          |   | (In thousands)      |   |
|-------------------------------|--------|---------------------|--------|
| June 30, 2011                 |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                          |   | Less Than 12 Months |   |   | 12 Months or Greater |   |   | Total |   |
|                          |   |                |   |   | Unrealized |   |   |   |   |   | Unrealized |   |   |   |   |   | Unrealized |   |
| Description of Securities     |   | Fair Value          |   |   | Gain |   |   | Fair Value |   |   | Gain |   |   | Fair Value |   |   | Gain |   |
|                          |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Available for sale securities |   | $                   | 937    |   |   | $ | 579 |   |   | $ | -- |   |   | $ | -- |   |   | $ | 937 |   |   | $ | 579 |   |
|                          |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                         |   | $                   | 937    |   |   | $ | 579 |   |   | $ | -- |   |   | $ | -- |   |   | $ | 937 |   |   | $ | 579 |   |
|                          |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| (Amounts in thousands, except for share amounts)   |   |
|----------------------------------------------------|--------|
|                                               |   |   |   |   |   |   |   | Additional |   |
|                                               |   | Common Stock |   |   | Paid-In |   |
|                                               |   | Shares |   |   | Amount |   |   | Capital |   |
|                                               |   |   |   |   |   |   |   |   |   |
|  Balance December 31, 2010                    |   |   | 27,068,610 |   |   | $ | 271 |   |   | $ | 121,062 |   |
|  2001 stock compensation plan                 |   |   | 40,000 |   |   |   | -- |   |   |   | 252 |   |
|  Exercise of employee stock options           |   |   | 97,885 |   |   |   | 1 |   |   |   | (226 | ) |
|  Exercise of outside director warrants        |   |   | 32,896 |   |   |   | -- |   |   |   | 39 |   |
|  Expense of employee options vesting          |   |   | -- |   |   |   | -- |   |   |   | 505 |   |
|  Expense of outside director warrants vesting |   |   | -- |   |   |   | -- |   |   |   | (16 | ) |
|  Balance June 30, 2011                        |   |   | 27,239,391 |   |   | $ | 272 |   |   | $ | 121,616 |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

|                                                        |   | June 30, 2011          |      |
|-------------------------------------------------------------|--------|------------------------|-----------|
|                                                        |   | Employee Stock Options |      |   | Stock Purchase Warrants |   |
|                                                        |   |                   |      |   | Weighted |   |   |   |   |   | Weighted |   |
|                                                        |   |                   |      |   | Average |   |   |   |   |   | Average |   |
|                                                        |   |                   |      |   | Exercise |   |   |   |   |   | Exercise |   |
|                                                        |   | Options                |      |   | Price |   |   | Warrants |   |   | Price |   |
|                                                        |   |                   |      |   |   |   |   |   |   |   |   |   |
| Outstanding balance at December 31, 2010                    |   |                   | 3,011,647 |   |   | $ | 3.87 |   |   |   | 320,000 |   |   | $ | 2.95 |   |
| Granted                                                     |   |                   | -         |   |   | $ | - |   |   |   | 20,000 |   |   | $ | 4.19 |   |
| Forfeited                                                   |   |                   | -         |   |   | $ | - |   |   |   | (20,000 | ) |   | $ | 2.52 |   |
| Expired                                                     |   |                   | -         |   |   | $ | - |   |   |   | - |   |   | $ | - |   |
| Exercised                                                   |   |                   | (368,136  | ) |   | $ | 3.94 |   |   |   | (95,000 | ) |   | $ | 2.99 |   |
| Outstanding at June 30, 2011                                |   |                   | 2,643,511 |   |   | $ | 3.86 |   |   |   | 225,000 |   |   | $ | 3.08 |   |
| Exercisable at June 30, 2011                                |   |                   | 2,246,012 |   |   | $ | 3.87 |   |   |   | 185,001 |   |   | $ | 2.93 |   |
|                                                        |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted Average Remaining Contractual Life - Years         |   |                   |      | 4.94 |   |   |   |   |   |   |   | 3.22 |   |
|                                                        |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Aggregate intrinsic value of options / warrants outstanding |   |                   | $         | 1,932,000 |   |   |   |   |   |   | $ | 275,000 |   |
|                                                        |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                             |   | (In thousands)                      |   |
|--------------------------------------------------|--------|-------------------------------------|--------|
|                                             |   | For the three months ended June 30, |   |   | For the six months ended June 30, |   |
|                                             |   | 2011                                |   |   | 2010 |   |   | 2011 |   |   | 2010 |   |
| Revenues:                                        |   |                                |   |   |   |   |   |   |   |   |   |   |
| Oil and gas                                      |   | $                                   | 8,148  |   |   | $ | 6,218 |   |   | $ | 13,031 |   |   | $ | 13,927 |   |
| Total revenues:                                  |   |                                | 8,148  |   |   |   | 6,218 |   |   |   | 13,031 |   |   |   | 13,927 |   |
|                                             |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                              |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Oil and gas                                      |   |                                | 5,075  |   |   |   | 3,894 |   |   |   | 11,939 |   |   |   | 7,279 |   |
| Mineral properties                               |   |                                | 535    |   |   |   | 454 |   |   |   | 1,007 |   |   |   | 860 |   |
| Total operating expenses:                        |   |                                | 5,610  |   |   |   | 4,348 |   |   |   | 12,946 |   |   |   | 8,139 |   |
|                                             |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                 |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Oil and gas                                      |   |                                | 20     |   |   |   | -- |   |   |   | 29 |   |   |   | -- |   |
| Mineral properties                               |   |                                | 9      |   |   |   | 12 |   |   |   | 18 |   |   |   | 24 |   |
| Total interest expense:                          |   |                                | 29     |   |   |   | 12 |   |   |   | 47 |   |   |   | 24 |   |
|                                             |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating (loss) income                          |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Oil and gas                                      |   |                                | 3,053  |   |   |   | 2,324 |   |   |   | 1,063 |   |   |   | 6,648 |   |
| Mineral properties                               |   |                                | (544   | ) |   |   | (466 | ) |   |   | (1,025 | ) |   |   | (884 | ) |
| Operating (loss) income                          |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| from identified segments                         |   |                                | 2,509  |   |   |   | 1,858 |   |   |   | 38 |   |   |   | 5,764 |   |
|                                             |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General and administrative expenses              |   |                                | (2,138 | ) |   |   | (2,167 | ) |   |   | (4,549 | ) |   |   | (4,835 | ) |
| Add back interest expense                        |   |                                | 29     |   |   |   | 12 |   |   |   | 47 |   |   |   | 24 |   |
| Other revenues and expenses:                     |   |                                | (61    | ) |   |   | 121 |   |   |   | (129 | ) |   |   | 1,211 |   |
| (Loss) income before income taxes                |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and discontinued operations                      |   | $                                   | 339    |   |   | $ | (176 | ) |   | $ | (4,593 | ) |   | $ | 2,164 |   |
|                                             |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation depletion and amortization expense: |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Oil and gas                                      |   | $                                   | 3,120  |   |   | $ | 2,396 |   |   | $ | 5,905 |   |   | $ | 4,651 |   |
| Mineral properties                               |   |                                | 25     |   |   |   | 18 |   |   |   | 51 |   |   |   | 36 |   |
| Corporate                                        |   |                                | 124    |   |   |   | 94 |   |   |   | 250 |   |   |   | 248 |   |
| Total depreciation expense                       |   | $                                   | 3,269  |   |   | $ | 2,508 |   |   | $ | 6,206 |   |   | $ | 4,935 |   |
|                                             |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                   |   | (In thousands) |    |
|------------------------|--------|----------------|---------|
|                   |   | June 30,       |    |   | December 31, |   |
|                   |   | 2011           |    |   | 2010 |   |
| Assets by segment      |   |           |    |   |   |   |
| Oil and Gas properties |   | $              | 93,610  |   |   | $ | 75,639 |   |
| Mineral properties     |   |           | 21,230  |   |   |   | 20,800 |   |
| Corporate assets       |   |           | 43,995  |   |   |   | 59,577 |   |
| Total assets           |   | $              | 158,835 |   |   | $ | 156,016 |   |
|                   |   |           |    |   |   |   |   |   |

----

|                                      |   | (In thousands) |    |
|-------------------------------------------|--------|----------------|---------|
|                                      |   | June 30,       |    |   | December 31, |   |
|                                      |   | 2011           |    |   | 2010 |   |
|  Unevaluated oil and gas properties  |   | $              | 30,628  |   |   | $ | 21,620 |   |
|  Evaluated oil and gas properties    |   |           | 78,537  |   |   |   | 63,317 |   |
|  Undeveloped mining properties       |   |           | 20,771  |   |   |   | 21,077 |   |
|  Investment in geothermal properties |   |           | 2,705   |   |   |   | 2,834 |   |
|                                      |   | $              | 132,641 |   |   | $ | 108,848 |   |
|                                      |   |           |    |   |   |   |   |   |

----

----

----

| ·   | Cash provided by operations for the six month period ended June 30, 2011 decreased to $2.0 million as compared to cash provided in operations of $7.0 million for the same period of the prior year.  This $5.0 million decrease year over year in cash from operating activities is predominantly a result of $3.4 million higher lease operating expenses and a realized loss of $1.6 million in risk management activities. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | For a complete discussion of cash provided by Operations please refer to Results of Operations below. |
|--------------------|-------------------------------------------------------------------------------------------------------|

----

| ·   | Investing activities consumed cash through the acquisition and development of oil and gas properties in the amount of $29.8 million during the first six months of 2011 (including payment of $5.7 million which was included in accounts payable at December 31, 2010).  Other uses of cash for investing activities in the period were:  the acquisition of property and equipment in the amount of $44,000, a change in restricted investments in the amount of $206,000, and the development of mining properties in the amount of $48,000. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Investing activities provided cash during the first six months of 2011 through the redemption of $16.8 million of treasury investments which were used to fund the purchase of oil and gas properties and advance drilling programs on existing prospects; $147,000 in proceeds from the sale of property and equipment; and $11,000 from the sale of marketable securities. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Financing activities consumed $186,000 during the first six months of 2011 from the exercise of employee options and non-employee warrants (the Company received $39,000 in proceeds from the exercise of warrants by a director and paid taxes of $225,000 as a result of the cashless exercise of options by employees).  Additionally, the Company paid $61,000 on its outstanding debt. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Financing activities provided $13.0 million during the first six months of 2011 from a combination of the borrowing of $3.0 million under our Senior Credit Facility with BNP and the borrowing of $10.0 million from a commercial bank. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Lower market prices for oil and gas |
|--------------------|-------------------------------------|

| ·   | Higher drilling and completion costs |
|--------------------|--------------------------------------|

| ·   | Higher lease operating expenses |
|--------------------|---------------------------------|

| ·   | Steeper decline rates than currently anticipated |
|--------------------|--------------------------------------------------|

| ·   | Mechanical and geological problems with the wells |
|--------------------|---------------------------------------------------|

----

----

----

|                                            |   | (In thousands)              |   |
|-------------------------------------------------|--------|-----------------------------|--------|
|                                            |   | For the three months ending |   |   | Increase |   |
|                                            |   | June 30, 2011               |   |   | June 30, 2010 |   |   | (Decrease) |   |
| Oil and gas revenues                            |   | $                           | 7,025  |   |   | $ | 6,218 |   |   | $ | 807 |   |
| Realized (loss) from risk management activities |   |                        | (1,015 | ) |   |   | -- |   |   |   | (1,015 | ) |
| Unrealized gain from risk management activities |   |                        | 2,138  |   |   |   | -- |   |   |   | 2,138 |   |
|                                            |   |                        | 8,148  |   |   |   | 6,218 |   |   |   | 1,930 |   |
| Operating expenses                              |   |                        | 1,955  |   |   |   | 1,498 |   |   |   | 457 |   |
| Depreciation, depletion and amortization        |   |                        | 3,120  |   |   |   | 2,396 |   |   |   | 724 |   |
|                                            |   |                        | 5,075  |   |   |   | 3,894 |   |   |   | 1,181 |   |
| Direct operating income                         |   | $                           | 3,073  |   |   | $ | 2,324 |   |   | $ | 749 |   |
|                                            |   |                        |   |   |   |   |   |   |   |   |   |   |

----

|                                                                    |   | Three Months Ended |    |   |     |   |
|-------------------------------------------------------------------------|--------|--------------------|---------|--------|----------|--------|
|                                                                    |   | June 30,           |    |   | Increase |   |
|                                                                    |   | 2011               |    |   | 2010     |   |   | (Decrease) |   |
| Production volumes                                                      |   |               |    |   |     |   |   |   |   |
| Oil (Bbls)                                                              |   |               | 56,109  |   |     |   | 72,601 |   |   |   | (16,492 | ) |
| Natural gas (Mcf)                                                       |   |               | 238,825 |   |     |   | 157,775 |   |   |   | 81,050 |   |
| Natural gas liquids (Bbls)                                              |   |               | 6,500   |   |     |   | 3,159 |   |   |   | 3,341 |   |
| Average sales prices, before economic hedging                           |   |               |    |   |     |   |   |   |   |   |   |   |
| Oil (per Bbl)                                                           |   | $                  | 99.77   |   |     | $      | 71.98 |   |   | $ | 27.79 |   |
| Natural gas (per Mcf)                                                   |   |               | 4.46    |   |     |   | 5.16 |   |   |   | (0.70 | ) |
| Natural gas liquids (per Bbl)                                           |   |               | 55.85   |   |     |   | 56.35 |   |   |   | (0.50 | ) |
| Operating revenues (in thousands)                                       |   |               |    |   |     |   |   |   |   |   |   |   |
| Oil                                                                     |   | $                  | 5,598   |   |     | $      | 5,226 |   |   | $ | 372 |   |
| Natural gas                                                             |   |               | 1,064   |   |     |   | 814 |   |   |   | 250 |   |
| Natural gas liquids                                                     |   |               | 363     |   |     |   | 178 |   |   |   | 185 |   |
| Total operating revenue                                                 |   |               | 7,025   |   |     |   | 6,218 |   |   |   | 807 |   |
| Lease operating expense                                                 |   |               | (1,289  | )      |     |   | (664 | ) |   |   | (625 | ) |
| Production taxes                                                        |   |               | (667    | )      |     |   | (834 | ) |   |   | 167 |   |
| Risk management activities                                              |   |               | 1,123   |   |     |   | -- |   |   |   | 1,123 |   |
| Impairment                                                              |   |               | --      |   |     |   | -- |   |   |   | -- |   |
| Direct operating income before depreciation, depletion and amortization |   |               | 6,192   |   |     |   | 4,720 |   |   |   | 1,472 |   |
| Depreciation, depletion and amortization                                |   |               | (3,120  | )      |     |   | (2,396 | ) |   |   | (724 | ) |
| Direct operating income                                                 |   | $                  | 3,072   |   |     | $      | 2,324 |   |   | $ | 748 |   |
|                                                                    |   |               |    |   |     |   |   |   |   |   |   |   |

----

----

|                                            |   | (In thousands)            |   |
|-------------------------------------------------|--------|---------------------------|--------|
|                                            |   | For the six months ending |   |   | Increase |   |
|                                            |   | June 30, 2011             |   |   | June 30, 2010 |   |   | (Decrease) |   |
| Oil and gas revenues                            |   | $                         | 13,704 |   |   | $ | 13,927 |   |   | $ | (223 | ) |
| Realized (loss) from risk management activities |   |                      | (1,570 | ) |   |   | -- |   |   |   | (1,570 | ) |
| Unrealized gain from risk management activities |   |                      | 897    |   |   |   | -- |   |   |   | 897 |   |
|                                            |   |                      | 13,031 |   |   |   | 13,927 |   |   |   | (896 | ) |
| Operating expenses                              |   |                      | 6,034  |   |   |   | 2,628 |   |   |   | 3,406 |   |
| Depreciation, depletion and amortization        |   |                      | 5,905  |   |   |   | 4,651 |   |   |   | 1,254 |   |
|                                            |   |                      | 11,939 |   |   |   | 7,279 |   |   |   | 4,660 |   |
| Direct operating income                         |   | $                         | 1,092  |   |   | $ | 6,648 |   |   | $ | (5,556 | ) |
|                                            |   |                      |   |   |   |   |   |   |   |   |   |   |

----

|                                                                    |   | Six Months Ended |    |   |     |   |
|-------------------------------------------------------------------------|--------|------------------|---------|--------|----------|--------|
|                                                                    |   | June 30,         |    |   | Increase |   |
|                                                                    |   | 2011             |    |   | 2010     |   |   | (Decrease) |   |
| Production volumes                                                      |   |             |    |   |     |   |   |   |   |
| Oil (Bbls)                                                              |   |             | 123,459 |   |     |   | 160,927 |   |   |   | (37,468 | ) |
| Natural gas (Mcf)                                                       |   |             | 412,580 |   |     |   | 317,634 |   |   |   | 94,946 |   |
| Natural gas liquids (Bbls)                                              |   |             | 11,281  |   |     |   | 6,134 |   |   |   | 5,147 |   |
| Average sales prices, before economic hedging                           |   |             |    |   |     |   |   |   |   |   |   |   |
| Oil (per Bbl)                                                           |   | $                | 90.77   |   |     | $      | 73.30 |   |   | $ | 17.47 |   |
| Natural gas (per Mcf)                                                   |   |             | 4.61    |   |     |   | 5.63 |   |   |   | (1.02 | ) |
| Natural gas liquids (per Bbl)                                           |   |             | 52.92   |   |     |   | 55.75 |   |   |   | (2.83 | ) |
| Operating revenues (in thousands)                                       |   |             |    |   |     |   |   |   |   |   |   |   |
| Oil                                                                     |   | $                | 11,206  |   |     | $      | 11,796 |   |   | $ | (590 | ) |
| Natural gas                                                             |   |             | 1,901   |   |     |   | 1,789 |   |   |   | 112 |   |
| Natural gas liquids                                                     |   |             | 597     |   |     |   | 342 |   |   |   | 255 |   |
| Total operating revenue                                                 |   |             | 13,704  |   |     |   | 13,927 |   |   |   | (223 | ) |
| Lease operating expense                                                 |   |             | (4,685  | )      |     |   | (868 | ) |   |   | (3,817 | ) |
| Production taxes                                                        |   |             | (1,349  | )      |     |   | (1,760 | ) |   |   | 411 |   |
| Risk management activities                                              |   |             | (673    | )      |     |   | -- |   |   |   | (673 | ) |
| Impairment                                                              |   |             | --      |   |     |   | -- |   |   |   | -- |   |
| Direct operating income before depreciation, depletion and amortization |   |             | 6,997   |   |     |   | 11,299 |   |   |   | (4,302 | ) |
| Depreciation, depletion and amortization                                |   |             | (5,905  | )      |     |   | (4,651 | ) |   |   | (1,254 | ) |
| Direct operating income                                                 |   | $                | 1,092   |   |     | $      | 6,648 |   |   | $ | (5,556 | ) |
|                                                                    |   |             |    |   |     |   |   |   |   |   |   |   |

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|                              |   | (In thousands)         |   |
|-----------------------------------|--------|------------------------|--------|
|                              |   | Payments due by period |   |
|                              |   |                   |   |   | Less |   |   | One to |   |   | Three to |   |   | More than |   |
|                              |   |                   |   |   | than one |   |   | Three |   |   | Five |   |   | Five |   |
|                              |   | Total                  |   |   | Year |   |   | Years |   |   | Years |   |   | Years |   |
|  Debt obligations            |   | $                      | 13,610 |   |   | $ | 3,481 |   |   | $ | 1,353 |   |   | $ | 8,776 |   |   | $ | -- |   |
|                              |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Executive retirement        |   |                   | 1,013  |   |   |   | 118 |   |   |   | 327 |   |   |   | 163 |   |   |   | 405 |   |
|                              |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Asset retirement obligation |   |                   | 447    |   |   |   | -- |   |   |   | 69 |   |   |   | 14 |   |   |   | 364 |   |
|                              |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Totals                      |   | $                      | 15,070 |   |   | $ | 3,599 |   |   | $ | 1,749 |   |   | $ | 8,953 |   |   | $ | 769 |   |
|                              |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                       |              |      |   | Quantity |   |         |   |   |   |
|----------------------------|-------------------|-----------|--------|----------|--------|--------------|--------|--------|--------|
| Settlement Period          | Counterparty      | Basis     |   | (Bbl/d)  |   | Strike Price |   |
|                       |              |      |   |     |   |         |   |   |   |
| Crude Oil Costless Collars |              |      |   |     |   |         |   |   |   |
| 10/01/10 - 09/30/11        |  BNP Paribas |  WTI |   |     | 200    |         | Put:   |   | $      | 75.00 |   |
|                       |              |      |   |     |   |         | Call:  |   | $      | 83.25 |   |
|                       |              |      |   |     |   |         |   |   |   |   |   |
| Crude Oil Swaps            |              |      |   |     |   |         |   |   |   |   |   |
| 10/01/10 - 09/30/11        |  BNP Paribas |  WTI |   |     | 200    |         | Fixed: |   | $      | 79.05 |   |
| 01/01/11 - 12/31/11        |  BNP Paribas |  WTI |   |     | 200    |         | Fixed: |   | $      | 89.60 |   |

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|                      |              |   | Fair Value at |   |
|---------------------------|-------------------|--------|---------------|--------|
| Underlying                | Location on       |   | June 30,      |   |
| Commodity                 | Balance Sheet     |   | 2011          |   |
|                      |              |   |          |   |
| Crude oil costless collar | Current Liability |   | $             | 245    |   |
| Crude oil swap #1         | Current Liability |   |          | 314    |   |
| Crude oil swap #2         | Current Liability |   |          | 268    |   |
|                      |              |   | $             | 827    |   |
|                      |              |   |          |   |   |

| i.   | That the Company’s disclosure controls and procedures are designed to ensure (a) that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and (b) that such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Principal Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure; and |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ii.   | That the Company’s disclosure controls and procedures are effective. |
|-----------------|----------------------------------------------------------------------------|

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| Name of Director     |   | Votes For  |   | Withheld |
|----------------------|--------|------------|--------|----------|
| Robert Scott Lorimer |   | 10,007,406 |   | 914,588  |
| Jerry Wayne Danni    |   | 10,638,574 |   | 283,420  |
| Leo A. Heath         |   | 10,643,761 |   | 278,233  |

| Votes For |   | Votes Against |   | Abstain |
|-----------|--------|---------------|--------|---------|
| 9,779,997 |   | 527,165       |   | 614,832 |

| 1 Year    |   | 2 Year  |   | 3 Year    |   | Abstain |
|-----------|--------|---------|--------|-----------|--------|---------|
| 8,408,205 |   | 202,195 |   | 2,013,151 |   | 298,443 |

| Votes For  |   | Votes Against |   | Abstain |
|------------|--------|---------------|--------|---------|
| 21,093,588 |   | 297,627       |   | 150,225 |

----

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

|                 |   | U.S. ENERGY CORP. |
|----------------------|--------|-------------------|
|                 |   | (Registrant)      |
|                 |   |              |
|                 |   |              |
|                 |   |              |
| Date: August 8, 2011 |   | By:               | /s/ Keith G. Larsen |
|                 |   |              | KEITH G. LARSEN |
|                 |   |              | Chairman and CEO |
|                 |   |              |   |
|                 |   |              |   |
|                 |   |              |   |
|                 |   |              |   |
| Date: August 8, 2011 |   | By:               | /s/ Bryon G. Mowry |
|                 |   |              | BRYON G. MOWRY |
|                 |   |              | Principal Accounting Officer |
|                 |   |              |   |

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