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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*

**ARTICLE      III**

*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                                                                                                                                                                            |
|                                                                                                                                                                                                       |

----

| 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                        |

----

| 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                       |
|                                                                                                                                                                                                                                                                                                                                                                                                        |                                      |