exhibit10_1.htm


    
      

    

     

     

    
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       877
North 8th West, Riverton, WY  82501 
USA                
Ph: (307) 856-9271  Fx: (307)
857-3050                
www.usnrg.com
 

       
 


      For Immediate
Release
 

       
 

      U.S. ENERGY CORP. ANNOUNCES INVESTMENT IN GEOTHERMAL
ENTITY
 

       
 

      RIVERTON, Wyoming – December
22, 2008 – U.S. Energy Corp. (NASDAQ Capital Market: “USEG”) today announced
that it has invested $3.445 million in Standard Steam Trust LLC (“SST”), a
private geothermal exploration and development company based in Denver,
Colorado.  Current capitalization of
SST (with other partners) is $13.8 million (25% USE), which now includes
approximately 60,000 acres of BLM, state and fee leases in seven prospect areas
in three states.  Acreage
accumulation is ongoing, with 15,216 acres (included in the figure above)
acquired at the December 19, 2008 BLM lease sale in Utah.  Such acreage accumulation will continue
and substantial additional capital is expected to be raised in 2009.  
 

       
 

      Today there are 66
geothermal-powered electrical generation plants in the United States, providing
2960 MW of base load (constant) power to utilities, which represents less than
1% of the electrical generation nationwide.  Twenty-six states have implemented
mandatory renewable energy portfolio standards, requiring utilities to be
generating from 5% to 33% of their power from renewable sources.  The deadlines for compliance with these
standards take effect from 2009 to 2025 depending on the state.  
 

       
 

      Geothermal plants are “zero
emission” and thus meet the renewable energy mandates.  The plants use existing technology to
circulate hot water from wells through binary or flash heat exchangers to
produce the power to drive turbines. All the water is injected back into the
earth to recharge the resource.
 

       
 

      Geothermal
power offers a number of advantages over other alternative energy sources,
including continuous and reliable output, as geothermal is not weather
dependent.  It is the only base load
renewable power source.  Additional
advantages include minimal pricing volatility, limited environmental impact,
high sustainability and improved security of supply. When viewed over the life
of the project, geothermal is among the least expensive options when compared
with both fossil fuel and alternative energy.  Initial infrastructure costs are
substantially lower than some other alternative forms of production, and nominal
energy inputs are required once the power plants are in production.
 

       
 

      We intend to advance each
individual prospect through the exploration and feasibility stages before
determining whether to: 1) sell a prospect to a utility, 2) bring an industry
partner on a joint venture basis, or 3) pursue further financing with
institutional capital to further advance revenue generating capabilities, which
may include the operation of power plants. 
The first phase of the project (through 2009) will be assembling a
portfolio of industrial scale prospects with a total targeted power resource of
approximately 2,000 MW; individual prospects are targeted at 100 to 500 MW.  The second phase is expected to be
completed in 2010, consisting of early science of geology, geophysics and
temperature gradient drilling.  The
third phase of work is scheduled for 2011 and will consist of production well
drilling on one of the prospects to quantify the geothermal resource present
there.  Permitting and construction
would follow beginning as early as the end of 2011.  
 

       
 

      “Meeting the growing
renewable portfolio standards at both the state and federal levels is driving
considerable interest in the geothermal space, and we expect interest to grow
substantially in the next few years. 
We will be working closely with our partners to assemble a strong
portfolio of assets and a clear 
 

       
 

       
 

       
 

      
        
           

        

        
           

          
            

          

        

        
           

          
            Press
Release

            December
22, 2008 

            Page
2 of 3

          

        

      

       
 

       
 

       
 

      strategic plan to create
value in both the near and mid- term,” stated Keith Larsen, CEO of U.S. Energy
Corp.  
 

       
 

       
 

      “After spending considerable
time reviewing the renewable energy sector, we firmly believe that our entry
into geothermal provides our company with a strong position in a market that has
tremendous growth potential,” said Mark Larsen, President of U.S. Energy
Corp.  “Geothermal is a renewable
subsurface fuel, and our partners are applying their extensive experience in
modern oil and gas plays to geothermal exploration.  This sector shows significant promise at
a time when carbon management is playing an increasing role in the generation of
clean energy in our nation,” he added.
 

       
 

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            Press
Release

            December
22, 2008 

            Page 3
of 3

          

        

      


      * * * * *
 

       
 

      About U.S.
Energy Corp.
 

       
 

      U.S. Energy Corp. is a diversified natural resource
company with interests in molybdenum, oil and gas, and real estate.  The Company is headquartered in
Riverton, Wyoming and its common stock is listed on The NASDAQ Capital Market
under the symbol “USEG”.
 

       
 

      * * * * *
 

       
 

       
 

       
 

      Disclosure
Regarding Mineral Resources Under SEC and Canadian Regulations; and
Forward-Looking Statements
 

       
 

      The Company
owns or may come to own stock in companies which are traded on foreign
exchanges, and may have agreements with some of these companies to acquire
and/or develop the Company’s mineral properties.  An example is Sutter Gold Mining
Inc.  These other companies are
subject to the reporting requirements of other
jurisdictions.
 

       
 

      United States
residents are cautioned that some of the information available about our mineral
properties, which is reported by the other companies in foreign jurisdictions,
may be materially different from what the Company is permitted to disclose in
the United States.
 

       
 

      This news
release includes statements which may constitute “forward-looking” statements,
usually containing the words “believe,” “estimate,” “project,” “expect," or
similar expressions.  These
statements are made pursuant to the safe harbor provision of the Private
Securities Litigation Reform Act of 1995. 
Forward-looking statements inherently involve risks and uncertainties
that could cause actual results to differ materially from the forward-looking
statements.  Factors that would
cause or contribute to such differences include, but are not limited to, future
trends in mineral prices, the availability of capital, competitive factors, and
other risks.  By making these
forward-looking statements, the Company undertakes no obligation to update these
statements for revision or changes after the date of this
release.
 

       
 

      For further
information on the differences between the reporting limitations of the United
States, compared to reports filed in foreign jurisdictions, and also concerning
forward-looking statements, please see the Company’s Form 10-K (“Disclosure
Regarding Forward-Looking Statements”; “Disclosure Regarding Mineral Resources
under SEC and Canadian Regulation”; and “Risk Factors”); and similar disclosures
in the Company’s Forms 10-Q.
 

       
 

       
 

      * * * * *
 

       
 

      For further
information, please contact:
 

       
 

      Reggie Larsen
 

      Director of Investor
Relations
 

      U.S. Energy Corp. 
 

      (800) 776-9271
 

      Reggie@usnrg.com
 

       
 

      Nick
Hurst
 

      The
Equicom Group
 

      Investor Relations
 

      (403) 538-4845
 

      nhurst@equicomgroup.com