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**STOCK        PURCHASE AGREEMENT**

***Agreement***
***USE***
***Sellers***
***Purchasers***

***Common        Stock***
***Company***

*Section        1.1*
***Shares***

*Section        1.2*

*Section        1.3*
***Closing***
***Closing        Date***

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*Section        2.1*

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*Section        2.2*

*Section        3.1*

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*Section        4.1*
***Representatives***
*        provided*
*        however*

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*Section        4.2*

*Section        4.3*

*Section        4.4*

*Section        4.5*

*Section        4.6*

*Section        4.7*

*Section        4.8*

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*Section        4.9*

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*Section        4.10*

*Section        4.11*

*Section        4.12*

*Section        4.13*

*Section        4.14*

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*Section        4.15*

*Section        4.16*

*Section        4.17*

*Signature        Page to Follow*

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| **DLJ                  MERCHANT BANKING PARTNERS III, L.P.**                                                                                                                                                                                                                                                                                       |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  By: DLJ                  Merchant Banking III, Inc.,       as                  Managing General Partner                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                               |
| By:                    /s/ Kenneth J. Lohsen                                                                                                                                                                                                                                                                                        |
| Name:                  Kenneth J. Lohsen                                                                                                                                                                                                                                                                                                           |
| Title:                  Vice President                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                               |
| **DLJ                  MERCHANT BANKING III, INC.**,                  as Advisory General Partner on behalf of DLJ Offshore Partners                  III,                  C.V.                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                               |
| By:                    /s/ Kenneth J. Lohsen                                                                                                                                                                                                                                                                                        |
| Name:                  Kenneth J. Lohsen                                                                                                                                                                                                                                                                                                           |
| Title:                  Vice President                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                               |
| **DLJ                  MERCHANT BANKING III, INC.**,                  as Advisory General Partner on behalf of DLJ Offshore Partners                  III-1, C.V.                  and as attorney-in-fact for DLJ Merchant Banking III, L.P., as                  Associate                  General Partner of DLJ Offshore Partners III-1, C.V. |
|                                                                                                                                                                                                                                                                                                                                               |
| By:                    /s/ Kenneth J. Lohsen                                                                                                                                                                                                                                                                                        |
| Name:                  Kenneth J. Lohsen                                                                                                                                                                                                                                                                                                           |
| Title:                  Vice President                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                               |
| **DLJ                  MERCHANT BANKING III, INC.**,                  as Advisory General Partner on behalf of DLJ Offshore Partners                  III-2, C.V.                  and as attorney-in-fact for DLJ Merchant Banking III, L.P., as                  Associate                  General Partner of DLJ Offshore Partners III-2, C.V. |
|                                                                                                                                                                                                                                                                                                                                               |
| By:                    /s/ Kenneth J. Lohsen                                                                                                                                                                                                                                                                                        |
| Name:                  Kenneth J. Lohsen                                                                                                                                                                                                                                                                                                           |
| Title:                  Vice President                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                               |

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| **MILLENNIUM                  PARTNERS II, L.P.**** **                                                                                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------|
|  By: DLJ                  Merchant Banking III, Inc.,       as                  Managing General Partner |
|                                                                                                                                             |
| By:                    /s/ Kenneth J. Lohsen                                                                                      |
| Name:                  Kenneth J. Lohsen                                                                                                         |
| Title:                  Vice President                                                                                                           |
|                                                                                                                                             |
|                                                                                                                                             |
| **DLJ                  MB PARTNERS III GMBH & CO****.                  KG**                                                                  |
|  By: DLJ                  Merchant Banking III, L.P.,      as                  Managing Limited Partner  |
|  By: DLJ                  Merchant Banking III, LLC,      as                  General Partner            |
|  By: DLJ                  Merchant Banking III, Inc., as Managing Member                                                               |
|                                                                                                                                             |
| By:                    /s/ Kenneth J. Lohsen                                                                                      |
| Name:                  Kenneth J. Lohsen                                                                                                         |
| Title:                  Vice President                                                                                                           |
|                                                                                                                                             |
|                                                                                                                                             |
| **MBP                  III PLAN INVESTORS, L.P.**                                                                                                |
|  By: DLJ                  Merchant Banking III, Inc.,       as                  Managing General Partner |
|                                                                                                                                             |
| By:                    /s/ Kenneth J. Lohsen                                                                                      |
| Name:                  Kenneth J. Lohsen                                                                                                         |
| Title:                  Vice President                                                                                                           |
|                                                                                                                                             |
|  **U.S.                  ENERGY CORPORATION**                                                                                               |
|                                                                                                                                             |
| By:                    /s/ Keith G. Larsen                                                                                        |
| Name:                  Keith G. Larsen                                                                                                           |
| Title:                  Chief Executive Officer                                                                                                  |
|                                                                                                                                             |
|  **CRESTED                  CORP.**                                                                                                         |
|                                                                                                                                             |
| By:                    /s/ Harold F. Herron                                                                                       |
| Name:                  Harold F. Herron                                                                                                          |
| Title:                  President                                                                                                                |
|                                                                                                                                             |

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| Purchaser:                                                                                                                                                                                                                                                                                                                                     | Number                  of Shares: |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|
|                                                                                                                                                                                                                                                                                                                                           |                               |
| DLJ                  Merchant Banking Partners III, L.P.                                                                                                                                                                                                                                                                                       | 1,870,117                          |
|                                                                                                                                                                                                                                                                                                                                           |                               |
| DLJ                  Merchant Banking III, Inc., as Advisory General Partner on behalf                  of DLJ                  Offshore Partners III, C.V.                                                                                                                                                                                    |  100,615                      |
|                                                                                                                                                                                                                                                                                                                                           |                               |
| DLJ                  Merchant Banking III, Inc., as Advisory General Partner on behalf                  of DLJ                  Offshore Partners III-1, C.V. and as attorney-in-fact for DLJ Merchant                  Banking III, L.P., as Associate General Partner of DLJ Offshore                  Partners                  III-1, C.V. |    33,374           |
|                                                                                                                                                                                                                                                                                                                                           |                               |
| DLJ                  Merchant Banking III, Inc., as Advisory General Partner on behalf                  of DLJ                  Offshore Partners III-2, C.V. and as attorney-in-fact for DLJ Merchant                  Banking III, L.P., as Associate General Partner of DLJ Offshore                  Partners                  III-2, C.V. |    23,772           |
|                                                                                                                                                                                                                                                                                                                                           |                               |
| Millennium                  Partners II, L.P.                                                                                                                                                                                                                                                                                                  | 15,772                             |
|                                                                                                                                                                                                                                                                                                                                           |                               |
| DLJ                  MB Partners III GmbH & Co., KG                                                                                                                                                                                                                                                                                        | 10,721                             |
|                                                                                                                                                                                                                                                                                                                                           |                               |
| MBP                  III Plan Investors, L.P.                                                                                                                                                                                                                                                                                                  | 404,731                            |
|                                                                                                                                                                                                                                                                                                                                           |                               |
| Total:                                                                                                                                                                                                                                                                                                                                         | 2,459,102                          |

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| For                  the account of US Energy:                                                                                                                                                                                                                                                                                                                                                                                  | Purchase                  Price Allocation: |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------|
| First                  Interstate Bank of Commerce Casper                  Office104                  South WolcottP.O.                  Box 40Casper,                  WY 82602(307)                  235-4207 ABA                  Number 092901683Account                  of : U.S. Energy Corp.Money                  Market Account Number: 836888750 Federal                  Identification Number 83-0205516 |  $8,970,003.93                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                            |                                        |
| For                  the account of Crested Corp.                                                                                                                                                                                                                                                                                                                                                                               | Purchase                  Price Allocation: |
|                                                                                                                                                                                                                                                                                                                                                                                                                            |                                        |
| First                  Interstate Bank of Commerce Casper                  Office104                  South WolcottP.O.                  Box 40Casper,                  WY 82602(307)                  235-4207 ABA                  Number 092901683Account                  of : Crested Corp.Money                  Market Account Number: 836888784 Federal                  Identification Number 84-0608126     |  $4,829,996.07                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                            |                                        |

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