CREDIT AGREEMENT
                              DATED JULY 30, 2004
                                    BETWEEN
                               U. S. ENERGY CORP.
                                      AND
                               GEDDES AND COMPANY








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                                CREDIT AGREEMENT

     This  CREDIT AGREEMENT entered into at Riverton, Wyoming on the 30th day of
July, 2004, is by and among U.S. Energy Corp., a Wyoming corporation duly formed
and  existing under the laws of the State of Wyoming (the "Borrower") and Geddes
and  Company, an Arizona corporation, duly formed and existing under the laws of
the  State  of  Arizona  (the  "Lender").

                                R E C I T A L S
                                ---------------

     A.   The  Borrower  has  requested  that the Lender provide a Loan of up to
          $3,000,000  to  the  Borrower.

     B.   The  Lender  has  agreed  to  make  such Loan subject to the terms and
          conditions  of  this  Agreement.

     C.   In  consideration  of  the  mutual  covenants  and  agreements  herein
          contained  and  of  the loans and commitments hereinafter referred to,
          the  parties  hereto  agree  as  follows:

                                    ARTICLE I
                                  DEFINITIONS

Section  1.01  Certain  Defined  Terms. As used in this Agreement, the following
               -----------------------
terms  have  the  meanings  specified  below:

     -    "Agreement"  means this Credit Agreement, as the same may from time to
           ---------
          time  be  amended,  modified,  supplemented  or  restated.

     -    "Collateral" means the Properties of the Borrower described in Section
           ----------
          4.01  of  this  Agreement.

     -    "Commitment"  means  the  commitment  of  the  Lender to make the Loan
           ----------
          hereunder  for  an  amount  up  to Three Million Dollars ($3,000,000).

     -    "Commitment  Fee"  has  the  meaning  assigned  such  term  in Section
           ---------------
          2.03(a).

     -    "Default"  means  any event or condition which constitutes an Event of
           -------
          Default or that upon notice, lapse of time or both would, unless cured
          or  waived,  become  an  Event  of  Default.

     -    "Effective  Date"  means  the  date  first  appearing  above.
           ---------------

     -    "Event  of  Default"  has the meaning assigned to such term in Section
           ------------------
          10.01.

     -    "Initial  Funding" has the meaning assigned such term in Section 2.02.
           ----------------


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     -    "Loan Documents" means this Credit Agreement, the Note, the Pledge and
           --------------
          Security  Agreement  and  the  Warrant  Agreement.

     -    "Loan"  means  the loan made by the Lender to the Borrower pursuant to
           ----
          this  Agreement.

     -    "Maturity  Date"  means the date that is two years after the Effective
           --------------
          Date.

     -    "Note" means the Secured Convertible Note of the Borrower described in
           ----
          Section  2.04  and  being  substantially  in  the form of Exhibit "A",
          together  with all amendments, modifications, replacements, extensions
          and  rearrangements  thereof.

     -    "Pledge  and  Security  Agreement"  means  an  agreement  between  the
           --------------------------------
          Borrower,  Rocky Mountain Gas, Inc., a Wyoming corporation ("RMG") and
          Lender  in  the  form  of  Exhibit  "B",  as  the same may be amended,
          modified  or  supplemented  from  time  to  time.

     -    "Warrant  Agreement"  means that certain Warrant Agreement from RMG to
           ------------------
          the Lender in the form attached hereto as Exhibit "C", as the same may
          be  amended,  modified  or  supplemented  from  time  to  time.

                                   ARTICLE II
                                   COMMITMENT

Section  2.01     Loans.     Subject  to  the  terms  and  conditions  of  this
                  -----
Agreement,  the  Lender  agrees  to  make  Loans to the Borrower in an aggregate
principal  amount  up to Three Million Dollars ($3,000,000), (the "Commitment").
Any  amount  of the Commitment which has not been borrowed by the Borrower prior
to  August 1, 2006 (the "Commitment Termination Date") shall not be available to
the  Borrower  for  Loans  from  and  after  such  Commitment  Termination Date.

Section  2.02     Borrowings.  Subject  to  the  satisfaction  of all conditions
                  ----------
precedent  by  the  date  of  such  funding:

     A.   Initial  Funding.  On the Effective Date, the Lender shall make a Loan
          ----------------
          to  the Borrower in an amount equal to Borrower's initial Disbursement
          Request  (the  "Initial  Funding").
                          ----------------

     B.   Subsequent  Funding.  Borrower, if in compliance with the terms of the
          -------------------
          Loan,  shall  have  the  right to receive the remaining balance of the
          Three  Million  Dollar  ($3,000,000)  Loan.  Borrower  shall  submit a
          Disbursement  Request  to  Lender  as provided for in Exhibit "1" with
          respect  to each further borrowing. Principal sums repaid or converted
          under  Article  7  during  the  loan  term  may  not  be  reborrowed.

     C.   Minimum  Amounts.  All  borrowings  made  pursuant  to  the  notices
          ----------------
          described  in  B  above  shall  be  in  amounts  of at least $100,000.


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Section  2.03     Commitment Fee.    The Borrower shall pay to Lender at closing
                  --------------
a  fee of $90,000, which is equal to 3.0% for all amounts committed to be loaned
to  the  Borrower  hereunder.

Section  2.04     Note.     The Loan made  by  the  Lender  shall  be  evidenced
by  a  Secured  Convertible  Note  of  the Borrower in substantially the form of
Exhibit  A  as  of  the  date  of  this  Agreement._ARTICLE  III

                                  ARTICLE III
                       PAYMENTS OF PRINCIPAL AND INTEREST

Section  3.01     Repayment  of  Loan.     Interest  on the borrowed outstanding
                  -------------------
principal  shall  be  payable  on  the first business day following each quarter
ending  September,  December,  March  and  June,  commencing October 1, 2004 and
continuing  until  the  entire  principal  amount  of  the Note is paid in full.

Section  3.02     Interest.
                  --------

     A.   Interest  Rates.  The  Borrower  will  pay  the Lender interest on the
          ---------------
          unpaid  principal  amount  actually  borrowed  and drawn down from the
          $3,000,000  Loan  at  Ten  Percent  (10%)  per  annum

     B.   Interest  Rate  Computations. All interest hereunder shall be computed
          ----------------------------
          on  the  basis of a year of 365 days (or 366 days in a leap year), and
          in  each  case  shall be payable for the actual number of days elapsed
          (including  the  first  day  but  excluding  the  last  day).

Section  3.03     Prepayments.     The Borrower may prepay all or any portion of
                  -----------
the  Loan  made  without  premium  or  penalty.

                                   ARTICLE IV
                                   COLLATERAL

Section  4.01     Collateral  Pool.  Collateral  for the Loan as provided for by
                  ----------------
the  Pledge  and  Security  Agreement  will  consist  of  the  following:

     A.   The  Ticaboo  Note  and  the  related  mortgage;  and

     B.   A  1981  Citation  II  550  jet,  S/N  #550-0264,  FAA  # N777WY,; and

     C.   RMG's  working  mineral  interests  in  Castle  Rock  CBM  leases; and

     D.   Four million issued and outstanding shares of Rocky Mountain Gas, Inc.
          ("RMG")  Common  Stock.


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                                    ARTICLE V
                              MANDATORY PREPAYMENT

Section 5.01     Mandatory Prepayment.     Borrower agrees to immediately prepay
the  balance  of  the  Loan  as  specified  in  the  Note.

                                   ARTICLE VI
              WARRANTS IN RMG, REGISTRATION AND CASHLESS EXERCISE

Section 6.01     Warrants in RMG.     Borrower agrees to have issued in Lender's
name  or  its designee, warrants to purchase RMG Common Stock in accordance with
the  Warrant  Agreement.

Section 6.02     Registration.     Lender shall have full registration rights on
                 ------------
the  shares  exercised  once  RMG  goes  public.

Section  6.03     Cashless  Exercise.     There  shall  be  no cashless exercise
                  ------------------
except  per  Section  7.01  of  this  Agreement.

                                  ARTICLE VII
                    OPTIONAL CONVERSION AND CONVERSION PRICE

Section  7.01     Optional  Conversion.     Lender  shall have the option at any
                  --------------------
time  prior  to payment of all amounts due under the Note, to convert all or any
portion  of  the  unpaid  principal  amount  of  the  Note  into  fully paid and
non-assessable  shares  of  common  stock  of  RMG  Common  Stock.

Section  7.02     Conversion Price.     The number of shares of RMG Common Stock
                  ----------------
that  Lender  shall be entitled to receive upon conversion shall be equal to the
number  attained  by  dividing  the  unpaid  principal  amount of the Note being
converted by the Conversion Price.  The "Conversion Price" shall be equal to the
Exercise  Price  (as  defined  in  the  Warrant  Agreement)  as  of  the date of
conversion.  Lender  shall  receive  full registration rights on any such shares
received  upon  conversion  to  the  same  extent  as  provided  in  the Warrant
Agreement.  If the Lender elects to convert any part of the Note into RMG Common
Stock,  the  Lender  shall refund back to USEG the three points paid to Geddes &
Company  at  closing on a prorata basis (i.e., if one million dollars out of the
three million dollar loan is converted, only one-third of the three points is to
refunded  back  to  USEG).

                                  ARTICLE VIII
                              CONDITIONS PRECEDENT

Article  8.01     Initial  Funding.     The  obligations  of  the Lender to make
                  ----------------
Loans  under  the  Initial  Funding shall not become effective until the date on
which  each  of  the  following  conditions  are  satisfied.

     A.   The  Lender  shall  have  received  all fees and other amounts due and
          payable


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          on  or  prior  to  the  Effective  Date.

     B.   The  Lender  shall have received the duly executed Note payable to the
          order  of  the  Lender  in  a principal amount equal to its Commitment
          dated  as  of  the  date  hereof.

     C.   The  Lender  shall  have  received from Borrower and RMG duly executed
          counterparts  of  the  Pledge  and  Security  and  Warrant  Agreements
          described on Exhibits B and C, and delivery of any Collateral required
          by  the  terms  thereof.

     D.   The  terms  of  the  Loan Documents have been approved by the Board of
          Directors  of  the  Borrower  and  RMG.

     E.   Lender  shall  have received an opinion of counsel, in form reasonably
          acceptable  to  Lender,  confirming  the  authorization, execution and
          delivery of the Loan Documents by Borrower and RMG, the enforceability
          of  the  Loan  Documents, and the validity, priority and perfection of
          the  security  interests  granted  to  Lender  in  the  Collateral.

                                   ARTICLE IX
                         REPRESENTATIONS AND WARRANTIES

              The Borrower and Lender represent and warrant that:

Section  9.01     Organization;  Powers.
                  ---------------------

     A.   Each  of  the Borrower and RMG is duly organized, validly existing and
          in  good  standing  under the laws of Wyoming, has all requisite power
          and  authority,  and  has  all  material  governmental  licenses,
          authorizations,  consents  and  approvals necessary, to own its assets
          and  to  carry  on  its  business  as  now  conducted.

     B.   The  Lender  is  duly organized, validly existing and in good standing
          under  the laws of Arizona, has all requisite power and authority, and
          has  all  material governmental licenses, authorizations, consents and
          approvals necessary, to own its assets and to carry on its business as
          now  conducted  and  warrants to the Borrower it has the $3,000,000 to
          loan  to  Borrower.

                                    ARTICLE X
                          EVENTS OF DEFAULT; REMEDIES

Section  10.01     Event  of  Default.     One  or  more of the following events
                   ------------------
shall  constitute  an  "Event  of  Default":


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     A.   The  Borrower  shall  fail  to  pay any interest due on the borrowings
          under  the  Loan  when  and  as the same shall become due and payable,
          whether  at  the  due  date  thereof or at a date fixed for prepayment
          thereof  or otherwise.

     B.   The  Borrower  shall  fail to pay the principal amount due on the Loan
          when  the  same  shall  become  due  and  payable.

     C.   The  Borrower  or  RMG  shall  default in the performance of any other
          agreement  or  covenant contained herein or in any other Loan Document
          (other  than  as  provided  in  subparagraph  A  or B above), and such
          default  shall  continue  uncured  for  twenty  (20) days after notice
          thereof  to  Borrower  given  by  Secured  Party.

Section  10.02     Remedies.     In the case of an Event of Default by Borrower,
                   --------
Lender shall have the right to declare the Note and the Loan then outstanding to
be due and payable according to the terms of the Note, and shall have all rights
as  described  in  the  Note  or  any  other  Loan  Document.

                                   ARTICLE XI
                                  MISCELLANEOUS

Section  11.01     Notices.
                   -------

     A.   All  notices  and other communications provided for herein shall be in
          writing  and  shall be delivered by hand or overnight courier service,
          mailed  by  certified  or  registered  mail  or  sent  by telecopy, as
          follows:

          1.   If  to  the  Borrower  or  RMG:
                    U.  S.  Energy  Corp.  /  Rocky  Mountain  Gas,  Inc.
                    877  North  8th  West
                    Riverton,  Wyoming  82501
                    Attn:  Scott  Lorimer
                    (Telecopy  No.  (307)  857-3050);


          2.  If  to  the  Lender:

                    Geddes  and  Company
                    2930  East  Camelback  Road,  Suite  110
                    Phoenix,  Arizona  85016
                    (Telecopy  No.  (602)  468-1793).

     B.   Notices and other communications to the other parties hereunder may be
          delivered  or  furnished  by  electronic  communications  pursuant  to
          procedures  agreed  by  the  parties.


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Section  11.02     Successors  and Assigns.     The provisions of this Agreement
                   -----------------------
shall  be  binding upon and inure to the benefit of the parties hereto and their
respective  successors  and assigns permitted hereby, except that any assignment
must  be approved in writing by the other party.  Such written consent shall not
be  unreasonably  withheld  by  either  party.

Section  11.03     Counterparts;  Integration;  Effectiveness.
                   ------------

     A.   This  Agreement  may  be  executed  in  counterparts (and by different
          parties  hereto  on  different  counterparts),  each  of  which  shall
          constitute  an  original,  but  all of which when taken together shall
          constitute  a  single  contract.

     B.   This  Agreement  and  the  other  Loan Documents constitute the entire
          contract  among  the parties relating to the subject matter hereof and
          thereof  and  supersede  any  and  all  previous  agreements  and
          understandings, oral or written, relating to the subject matter hereof
          and thereof. This Agreement and the other Loan Documents represent the
          final  agreement  among  the parties hereto and thereto and may not be
          contradicted  by evidence of prior, contemporaneous or subsequent oral
          agreements  of  the  parties.

Section 11.04     Severability.     Any provision of this Agreement or any other
                  ------------
Loan  Document  held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality  or  unenforceability  without  affecting  the validity, legality and
enforceability of the remaining provisions hereof or thereof; and the invalidity
of a particular provision in a particular jurisdiction shall not invalidate such
provision.

Section  11.05     Governing  Law;  Jurisdiction.
                   --------------

     A.   This  Agreement  and  the  Loan  Documents  (other  than  the  Warrant
          Agreement)  shall be governed by, and construed in accordance with the
          laws  of  the  State  of  Arizona.

     B.   Any  legal  action  or  proceeding  with respect to the Loan Documents
          (other  than  the Warrant Agreement) shall be brought in the Courts of
          the  State  of Arizona, and each party consents to the jurisdiction of
          such  Courts.

Section  11.06     Headings.  Article  and Section  headings and  the  Table  of
                   --------
Contents used herein are for convenience of reference only, are not part of this
Agreement  and  shall  not  affect  the  construction  of,  or  be  taken  into
consideration  in  interpreting,  this  Agreement.

Section  11.07     Condition  to  Borrower  Obligations.  The  obligations  of
                   ------------------------------------
Borrower  and  RMG  hereunder  shall  be  ineffective  until, and are subject to
obtaining  the  approval  of  the Boards of Directors of Borrower and RMG of the
transactions  contemplated  hereby; this Agreement shall automatically terminate
and  be  of  no force and effect unless such approvals are obtained on or before
August  6,  2004.


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     The parties hereto have caused this Agreement to be duly executed as of the
day  and  year  first  above  written.

BORROWER:                               U.S. ENERGY CORP.


                                        By:    /s/ Keith G. Larsen
                                           -------------------------------------
                                           Name:  Keith G. Larsen
                                           Title: President


LENDER:                                 GEDDES AND COMPANY


                                        By:    /s/ F. Michael Geddes
                                           -------------------------------------
                                           Name:  F. Michael Geddes
                                           Title: President


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                                  EXHIBIT "1"

                              DISBURSEMENT REQUEST



     DATE:  ___________________________

     TO:       Geddes  and  Company
               2930  Camelback  Road,  Suite  110
               Phoenix,  Arizona  85016
               (602)  468-  1793  (facsimile)

     FROM:     U.  S.  Energy  Corp.
               877  North  8th  West
               Riverton,  Wyoming  82501
               (307)  857-3050  (facsimile)


     Pursuant  to  the  July  30,  2004  Credit  Agreement and the July 30, 2004
Secured  Convertible  Note, Borrower hereby requests the following disbursement:

Current  Amount  Borrowed:            $_______________________

Amount  Requested:                    $_______________________

Total  Borrowed  After  Request       $_______________________

Date  Required:                       ________________________


                                      U.S. Energy Corp.


                                      By:  ____________________________
                                              KEITH G. LARSEN
                                              President


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                             EXHIBITS AND SCHEDULES
                             ----------------------

     Exhibit  A     Secured  Convertible  Note
     Exhibit  B     Form  of  Pledge  and  Security  Agreement
     Exhibit  C     Form  of  Warrant  Agreement


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