EXHIBIT 10.58

                         OUT SOURCING & LEASE AGREEMENT

This  Agreement is entered into between Yellow Stone Fuels,  Inc.,  (YFI) and US
Energy Corp. and Crested Corp. d/b/a USECC,  consistent with the Ratification of
Understanding  executed by the parties on December 1, 1996.  This Agreement sets
forth the terms, conditions, responsibilities and consideration for specific out
sourcing arrangements, cost sharing, and service exchanges.

                                    RECITALS

        WHEREAS, YFI and USECC have entered into a Ratification Of Understanding
wherein USECC, for valuable  consideration,  including the opportunity to obtain
equity  interest in YFI for minimal  contribution  and for other future business
opportunities through YFI, and;

        WHEREAS, USECC desires in consideration of the benefits set forth in the
Ratification  of  Understanding  has agreed to enter into  specific  out service
arrangements with YFI by providing access to various company managerial services
and  expertise,  and YFI desires to have access to and pay for the costs of such
services, and;

        WHEREAS,  USECC  desires to lease to YFI office space,  furnishings  and
general  office  equipment  and YFI desires to lease from USECC  certain  office
space, furnishings and office equipment and compensate USECC for the same, and;

        WHEREAS,  USECC  desires to make  available to YFI certain  employees to
perform various accounting,  insurance,  payroll, secretarial services and other
consulting  work,  and YFI desires to make  available to USECC its  employees to
perform certain consulting work, and other expertise,  and each party desires to
reimburse the other at a reasonable  hourly rate for the costs  associated  with
any exchange, consulting, services or employee work, and;

        WHEREAS,  each  party  believes  it will  benefit  from such  reciprocal
exchanges, out sourcing, consultation and reasonable compensation;

        NOW, THEREFORE, YFI and USECC, for the mutual benefits and consideration
set forth herein and in the  Ratification  of  Understanding,  hereby  agrees as
follows:

                                  I. ACCOUNTING

1.1 USECC shall,  consistent  with its own practices,  maintain for YFI detailed
and comprehensive  accounting records, all in accordance with generally accepted
accounting practices.

1.2 USECC shall provide the  following  services and submit an accounting of the
same consistent with the procedures set forth below:



<PAGE>


                                                                   EXHIBIT 10.58

        a. Assume responsibility to maintain all records for payroll for YFI and
make payroll on behalf of YFI employees  consistent with and as directed by YFI,
from time to time and  consistent  with  USECC's  current  practice  for its own
employees.

        b. Perform all necessary bookkeeping,  as directed by YFI and consistent
with USECC's methods, and generally accepted bookkeeping practices.

        c. Take all  necessary  steps to admit any YFI employees so requested to
USECC's health  insurance plan and  thereafter  administer all health  insurance
related  functions  consistent  with such program and to  accurately  record and
document all labor and costs associated with the same for reimbursement by YFI.

        d. Provide all necessary  secretarial  services,  data  processing,  and
expertise  necessary to complete all such accounting  services and keep accurate
records of all time and costs consumed by such duties.

        e. Charge YFI a reasonable fee (not to exceed 10% over actual costs) for
all services  performed by USECC employees  consistent with this agreement,  and
for any  and all  work  required  and  assigned  to them by YFI and  maintain  a
comprehensive accounting of the same

        1.3  YFI shall reimburse  USECC for all  actual  costs  relating  to all
services and other work performed by USECC employees plus an additional  overage
amount to be  negotiated  by the  parties,  but not to exceed  10% of the actual
costs.  Payment of such charges  shall be from time to time, as agreed to by the
parties but, in any event, no less than on a quarterly basis.

        1.4  USECC  shall  prepare  and  present,  on a  monthly  basis,  a full
accounting of all costs associated with the services  performed by its employees
for YFI along with similar  accounting for services and consulting  performed by
YFI employees for USECC.

                                  II. PERSONNEL

        2.1 USECC agrees it shall  register and otherwise  provide  coverage for
all YFI  employees  designated  by YFI  within  the  health  insurance  policies
maintained by USECC.

        2.2 USECC shall administer all aspects of the health  insurance  program
for all YFI employees covered by its policies.

        2.3 USECC shall maintain all general personnel records,  employee files,
and other related documentation as directed by YFI from time to time.

        2.4 YFI shall reimburse USECC for all costs associated with the services
provided  pursuant to this  section,  at a rate not to exceed USECC actual costs
for the same.

                                        2

<PAGE>


                                                                   EXHIBIT 10.58


                                   III. LEASE

        3.1 USECC agrees to lease to YFI  approximately  1,000 sq. ft. of office
space located at its headquarters at Riverton, Wyoming..

        3.2 USECC agrees to provide  furnishings,  office equipment,  telephones
and telephone services,  general secretarial services,  janitorial services, and
other office related matters.

        3.3 YFI shall pay USECC a lease  payment  of  $800.00  per month for the
office  space and  furnishings,  and $200.00 per month for all costs  associated
with telephone services, janitorial work, and office overhead.

        3.4 Such  lease  arrangements  shall be  modified  from  time to time as
agreed to by the parties.

                                    IV. TERM

4.1 This Out Sourcing Agreement shall remain in effect for 3 years from the date
set out  below,  and  thereafter  continue  from  year to year  until  otherwise
terminated by the parties. After 1 year, each party may terminate this agreement
upon 90 days written notice to the other party.

4.2 Upon  termination,  a full  accounting  shall be made and the indebted party
shall have 90 days to balance all outstanding amounts due.

                               V. RESPONSIBILITIES

5.1 Each party shall use good faith efforts to perform the tasks and obligations
set  forth in this  Agreement,  including  taking  all  necessary  steps to make
personnel  available in a timely fashion to assist the other party as such needs
arise in the daily operation of the respective  businesses,  and shall in no way
interfere  with or impair the ability of the other party to conduct its business
affairs.

5.2 Neither party or its employees shall disclose information about the business
or business  practices of the other without the express  written  consent of the
other. Each party shall take all reasonable steps to insure the  confidentiality
the respective business practices of the other party.



                                        3

<PAGE>


                                                                   EXHIBIT 10.58

     Dated December 1, 1996.

YELLOW STONE FUELS, INC.


    /s/ MARK LARSEN
-----------------------------
By:     Mark Larsen,
        President

U.S. ENERGY CORP.                                  CRESTED CORP.


    /s/ JOHN L. LARSEN                                /s/ MAX T. EVANS
-----------------------------                     ------------------------------
By:     John L. Larsen,                            By:    Max T. Evans,
        President                                         President

                                        4

<PAGE>