exhibit10_1.htm


    
      

    

     

     

    

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


      


      


      For
Immediate Release

      


      U.S.
ENERGY CORP. SIGNS OIL AND GAS PARTICIPATION AGREEMENT WITH PRIVATE UTAH-BASED
COMPANY

      


      


      RIVERTON, Wyoming – January 7,
2009 – U.S. Energy Corp. (NASDAQ Capital Market: “USEG”) (“USE” or the
“Company”), a natural resources exploration and development company with
interests in molybdenum, oil and gas, geothermal, and real estate, today
announced that it has entered in to a Participation Agreement with Ridgeland
Wyoming, Inc. (“Ridgeland”), a private Utah-based oil and gas company to acquire
a 50% working interest in an oil and gas prospect in an Area of Mutual Interest
(AMI) located in northeastern Wyoming.  Ridgeland has over 30 years of
industry experience in the Powder River Basin and will operate the
prospect.

      


      Under the
terms of the agreement, U.S. Energy has paid a $25,000 prospect fee and will be
responsible for approximately 58% of the costs to drill the first well through a
casing point decision, to earn a 50% working interest (40% net revenue
interest).  The initial commitment under the agreement is
approximately $340,000 to the casing point.  Completion of this well,
and up to two additional wells on this leasehold, will be on a “heads-up”
unpromoted basis.  Spudding of the first well is expected to commence
in late January 2009 with an initial planned drilling depth of approximately
6,000 feet.

      


      “With our
current net production rate of approximately 1,700 MCFE/D, we continue to expand
our geographically diverse portfolio of oil and gas assets by taking meaningful
positions in prospects in known producing areas in an effort to manage risk and
ultimately drive cash flow,” stated Keith Larsen, CEO of U.S. Energy
Corp.  “As a company, we continue to evaluate a broad range of oil and
gas opportunities for potential investment, with a goal of exiting the year with
a production rate of 7,000 MCFE/D,” he added.

      


      


      


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            Press
Release

            January
7, 2009

            Page  of
2 of 2

            


          

        

      


      


      


      Note
Regarding Mcfe

      


      In this
press release, Mcfes are derived by converting oil to gas in the ratio of one
barrel of oil to six thousand cubic feet of gas (1 bbl:6 Mcf).  One
thousand cubic feet of gas equivalent (“Mcfe”) amounts may be misleading,
particularly if used in isolation.  A Mcfe conversion ratio of 1 bbl
of oil to 6 Mcf of natural gas is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not represent a value of
equivalency at the well head.

      


      About
U.S. Energy Corp.

      


      U.S.
Energy Corp. is a diversified natural resource company with interests in
molybdenum, oil and gas, geothermal 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.

      1 800 776
9271

      Reggie@usnrg.com

      


      Nick
Hurst

      The
Equicom Group

      Investor
Relations

      403 538
4845

      nhurst@equicomgroup.com