Document:

Exhibit 10.3

 

CONTRIBUTION
AGREEMENT

 

This
Contribution Agreement (this “Agreement”), is made and entered into as of January 5, 2022, by and among U.S.
Energy Corp., a Wyoming corporation (the “Company”); Lubbock Energy Partners LLC, a Texas limited liability
company (“Lubbock”); Synergy Offshore LLC, a Texas limited liability company (“Synergy”);
and Banner Oil & Gas, LLC, a Delaware limited liability company (“Banner”),
Woodford Petroleum, LLC, a Delaware limited liability company (“Woodford”), and Llano Energy LLC,
a Delaware limited liability company (“Llano”, and together with Banner and Woodford, collectively, the “Sage
Road Entities”), each a “Party” and collectively, the “Parties”. Lubbock,
Synergy and the Sage Road Entities are each referred to as a “Seller Party” and collectively referred to as
the “Seller Parties”.

 

A.
Concurrent with the execution and delivery of this Agreement, each of Lubbock, Synergy and the Sage Road Entities have entered into a
separate Purchase and Sale Agreement with the Company (collectively the “Purchase and Sale Agreements”), pursuant
to which such Seller Party(ies) will sell upon the closing thereof certain of their assets in exchange for shares of the Company’s
common stock (“Issued Stock”) representing over 80% of the voting shares and over 80% of each class of non-voting
shares (if any) of the Company as of the issuance thereof (capitalized terms used, but not defined, herein have the meanings provided
in the Purchase and Sale Agreements).

 

B.
The Seller Parties and the Company desire to enter into this Agreement to confirm their intent that all three (3) Purchase and Sale Agreements
be deemed one transaction, constituting one exchange as described in Section 351 of the U.S. Internal Revenue Code of 1986, as
amended (the “Code”).

 

The
Parties agree as follows:

 

1.
Section 351 Transaction.

 

2.
The Purchase and Sale Agreements, while individual in nature, were negotiated by each of the Seller Parties collectively with the Company,
and are intended to be part of one singular transaction.

 

3.
The Closing under each of the Purchase and Sale Agreements is conditioned on the consummation of the Closing under each of the other
Purchase and Sale Agreements.

 

4.
Following the Closings, the Seller Parties will control, within the meaning of Section 368(c) of the Code, the Company, with the assets
to be acquired by the Company pursuant to the Purchase and Sale Agreements collectively constituting the “Contributed Assets”.

 

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5.
The intent of the Parties is for the Purchase and Sale Agreements, and the transactions contemplated thereby (collectively, the “Transaction”),
to provide for a tax-free exchange between the Seller Parties and the Company as described in, and in accordance with, Section 351 of
the Code (a “Section 351 Exchange”), and the Parties shall report consistently therewith. The Parties represent
and warrant to one another that they are not aware of any facts or circumstances pursuant to which the Transaction would not constitute
a Section 351 Exchange. Without limiting the foregoing, (a) the Company represents and warrants to each Seller Party that (i) immediately
after the conveyance of the Contributed Assets to the Company by the Seller Parties in exchange for the consideration set forth in the
Purchase and Sale Agreements, the Seller Parties will be in control, within the meaning of Section 368(c) of the Code, of the Company,
(ii) the Company has no prearranged plan to transfer or otherwise dispose of the Contributed Assets after its acquisition of the Contributed
Assets pursuant to the Purchase and Sale Agreements, and (iii) the Company is not an entity described in Treasury Regulation Section
1.351-1(c)(1)(ii), and (b) each Seller Party represents and warrants to each other Seller Party and the Company that (i) such Seller
Party has no prearranged plan to transfer or otherwise dispose of shares of stock in the Company received by such Seller Party pursuant
to the applicable Purchase and Sale Agreement, (ii) no Seller Party intends to contribute services or any of the other enumerated items
under Section 351(d) of the Code that do not constitute “property” in exchange for the Issued Stock, (iii) each Seller Party
is solvent and able to pay its respective debts as they come due and will continue to be able to do so after the completion of the Transaction.

 

6.
None of the Parties shall take any position, publicly, or internally, nor with the Internal Revenue Service, contrary to the terms of
this Agreement, including any position that the Transaction does not constitute a Section 351 Exchange.

 

7.
Termination. This Agreement shall terminate and be of no further effect if any of the Purchase and Sale Agreements is terminated
prior to the Closing thereunder.

 

8.
Miscellaneous.

 

8.1.
Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective
successors, heirs and permitted assigns of the Parties. Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the Parties hereto or their respective successors and permitted assigns any rights, remedies, obligations, or liabilities
under or by reason of this Agreement.

 

8.2.
Enforceability. This Agreement may only be enforced by the Parties hereto, and nothing set forth in this Agreement shall be construed
to confer upon or give to any other person, other than the Parties hereto and their respective successors, heirs and permitted assigns,
any rights to enforce the undertakings set forth herein.

 

8.3.
Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.

 

(a)
This Agreement, and all claims or causes of action (whether in contract, tort or otherwise) that may be based upon, arise out of or relating
to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon,
arising out of or related to any representation or warranty made in or in connection with this Agreement or as an inducement to enter
into this Agreement) shall be governed by and construed in accordance with the internal Laws of the State of Texas, without regard to
any choice-of-law or conflicts-of-law provision or rule (whether of the State of Texas or any other jurisdiction) that would cause the
application of the Laws of any jurisdiction other than the State of Texas.

 

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(b)
Each of the Parties hereby irrevocably and unconditionally (i) submits, for itself and its property, to the exclusive jurisdiction and
venue of any federal court or state court sitting in Houston, Texas) (“Texas Courts”), and any appellate court
from any decision thereof, in any action arising out of or relating to this Agreement, including the negotiation, execution or performance
of this Agreement and agrees that all claims in respect of any such action shall be heard and determined in the Texas Courts, (ii) waives,
to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of
any action arising out of or relating to this Agreement or the negotiation, execution or performance of this Agreement in the Texas Courts,
including any objection based on its place of incorporation or domicile, (iii) waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action in any such court and (iv) agrees that a final judgment in any such action
shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

 

(c)
EACH OF THE PARTIES ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY BE BASED UPON, ARISE OUT OF OR RELATED TO THIS AGREEMENT IS
LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY FOR ANY DISPUTE BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE BREACH,
TERMINATION OR VALIDITY HEREOF OR ANY TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES CERTIFIES AND ACKNOWLEDGES THAT
(I) NEITHER THE OTHER PARTIES NOR THEIR RESPECTIVE REPRESENTATIVES, AGENTS OR ATTORNEYS HAVE REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH OF THE PARTIES UNDERSTANDS AND
HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH OF THE PARTIES MAKES THIS WAIVER VOLUNTARILY AND (IV) EACH OF THE PARTIES
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS OF THIS SECTION 4.3(c).
ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

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8.4.
Counterparts. This Agreement and any signed agreement or instrument entered into in connection with this Agreement, and any amendments
hereto or thereto, may be executed in one or more counterparts, all of which shall constitute one and the same instrument. Any such counterpart,
to the extent delivered by means of a facsimile machine or by .pdf, .tif, .gif, .jpeg or similar attachment to electronic mail (any such
delivery, an “Electronic Delivery”) shall be treated in all manner and respects as an original executed counterpart
and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.

 

8.5.
Headings. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.

 

8.6.
Consent Required to Amend, Terminate or Waive. This Agreement may be amended or terminated and the observance of any term hereof
may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument executed
by each of the Parties hereto.

 

8.7.
Specific Performance. The Parties agree that irreparable damage would occur if any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any federal or state court located in Texas, this being in addition to any other remedy at law or in
equity, and the Parties to this Agreement hereby waive any requirement for the posting of any bond or similar collateral in connection
therewith. The Parties agree that they shall not object to the granting of injunctive or other equitable relief on the basis that there
exists an adequate remedy at law.

 

8.8.
Severability. If any provision of this or the application of any such provision to any Party or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other provision hereof or the application of such provision to any other Parties or circumstances.

 

8.9.
Further Assurances. At any time or from time to time after the date hereof, the Parties agree to cooperate with each other, and
at the request of any other Party, to execute and deliver any further instruments or documents and to take all such further action as
the other Party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby and
to otherwise carry out the intent of the Parties hereunder.

 

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8.10.
Entire Agreement. This Agreement, the Purchase and Sale Agreements, the Confidentiality Agreement, and (when executed) the other
Transaction Documents contain the entire agreement and understanding between the Parties with respect to the subject matter hereof and
thereof, and all prior and contemporaneous negotiations, understandings, and agreements between the Parties on the matters contained
herein and therein are expressly merged into and superseded by this Agreement, the Purchase and Sale Agreements, the Confidentiality
Agreement, and (when executed) the other Transaction Documents. The provisions of this Agreement, the Purchase and Sale Agreements, the
Confidentiality Agreement, and (when executed) the other Transaction Documents may not be explained, supplemented, or qualified through
evidence of trade usage or a prior course of dealings. No Party shall be liable or bound to any other Party in any manner by any representations,
warranties, covenants, or agreements relating to such subject matter except as specifically set forth in this Agreement, the Purchase
and Sale Agreements, the Confidentiality Agreement, and (when executed) the other Transaction Documents.

 

[Remainder
of page left intentionally blank. Signature pages follow.]

 

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IN
WITNESS WHEREOF, the Parties have executed this Contribution Agreement as of the date first written above.

 

	U.S.
    Energy Corp.	 
	 	 
	By:	 /s/
    Ryan Smith 	 
	Name:	Ryan
    Smith	 
	Title:	CEO	 
	 	 	 
	Lubbock
    Energy Partners LLC	 
	 	 
	By:	 /s/
    John Weinzierl 	 
	Name:	John
    Weinzierl	 
	Title:	CEO	 
	 	 	 
	Synergy
    Offshore LLC	 
	 	 
	By:	 /s/
    Duane King 	 
	Name:	Duane
    King	 
	Title:	Chief
    Executive Officer	 

 

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	Banner
    Oil & Gas, LLC	 
	 	 
	By:	 /s/
    Joshua L. Batchelor 	 
	Name:	Joshua
    L. Batchelor	 
	Title:	Manager	 
	 	 	 
	Woodford
    Petroleum, LLC	 
	 	 
	By:	 /s/
    Joshua L. Batchelor 	 
	Name:	Joshua
    L. Batchelor	 
	Title:	Manager	 
	 	 	 
	Llano
    Energy LLC	 
	 	 
	By:	 /s/
    Joshua L. Batchelor 	 
	Name:	Joshua
    L. Batchelor	 
	Title:	Manager	 

 

    	Contribution Agreement
Page 7
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                of 7Exhibit 10.4

 

Synergy
Producing Properties, LLC

 

October
__, 2021

 

US
Energy Corp.

Attn:
Ryan Smith

675
Bering, Suite 390

Houston,
TX 77057

 

	RE:	Farmout Agreement
	 	Glacier and Toole Counties
	 	Montana

 

Gentlemen:

 

This
letter shall put into writing the farmout agreement (the “Agreement”) between U.S. Energy Corp, a Wyoming corporation
(“Farmor”) and Synergy Offshore, LLC, a Texas limited liability company (“Farmee”) hereto covering certain
properties located in Glacier and Toole Counties, Montana. On October 4, 2021, Farmee entered into a Purchase and Sale Agreement (“PSA”)
with Farmor in which Farmee conveyed to Farmor, among other assets, all right title and interest in and to Farmee’s producing properties
located in Montana. With specific reference to said PSA, and subject to the terms and conditions set out below, Farmor hereby agrees
to farmout back to Farmee certain rights in and to the specific properties located in Glacier and Toole Counties, Montana (“Farmout
Properties”), the legal descriptions of which set forth in Exhibit “A”, attached hereto, and the units, leases
and wells associated with the properties set forth in Exhibit “B” hereto.

 

		1.	Secondary
                                            and Tertiary Operations by Farmee. Farmor and Farmee agree pursuant to this Agreement
                                            that Farmee will have the right to enhance the oil and gas production on the Farmout Properties
                                            by secondary and tertiary recovery operations, including, but not limited to, the re-entry
                                            and utilization of existing units or wells, the drilling of new wells, and the installation
                                            of new production and transportation equipment and facilities. Said enhancing operations
                                            may be for the purpose of creating injection and/or production wells. Farmee shall bear 100%
                                            of the drilling, operating, equipping and completing expense associated with the enhancing
                                            operations conducted on the Farmout Properties, and shall own all equipment and facilities
                                            that it installs. Farmor shall bear no expense of the drilling, operating, equipping and
                                            completing such enhancement operations. Farmor and Farmee agree that, except as specifically
                                            set forth in Paragraph 7, below, Farmee may conduct operations in any legal location on the
                                            Farmout Properties, for so long as it does not interfere with the existing production or
                                            the behind pipe reserves of Farmor.

 

9821
katy freeway, Suite 805 ●  Houston, Texas 77024 ●  (713) 827-9988

 

    	 

     

    

 

	US Energy Corp.	Date
	Farmout Agreement	 
	Page 2	 

 

		2.	Term.
                                            This Agreement shall have an initial term of ten (10) years. If Farmee has not conducted
                                            any enhancement operations during the Term, this Agreement shall terminate. If operations
                                            have been conducted and the Farmee has succeeded in increasing the production of any unit
                                            or wells in a unit, this Agreement shall continue in full force and effect for so long as
                                            there is oil and gas in commercially paying quantities in any unit or field affected by the
                                            Farmee pursuant to the terms hereof.

 

		3.	Determination
                                            of IPR. At least thirty (30) days prior to the commencement of any production enhancing
                                            operations by Farmee, the Farmor and Farmee will agree upon an Initial Production Rate (“IPR”)
                                            to be established for each well, unit or field subject to this Agreement. In the event a
                                            new well or new depth is drilled in any unit or field, the IPR shall be zero for that well
                                            or depth. The IPR shall be determined by a mutually agreed independent petroleum engineering
                                            firm based on the most recently prepared reserve report prepared for the audited financial
                                            statements for the Farmor, and based on the historical monthly rate of oil and gas production
                                            as of the date of the determination of the IPR, with the proposed estimated decline rate
                                            for that well, unit or field. Once enhancement operations are conducted on any unit or field,
                                            any increase in production over the life of the well, unit or field, shall be the Enhanced
                                            Production Rate (“EPR”). Farmor shall be entitled to the working interest and
                                            net revenue interest attributable to the IPR, and Farmee shall be entitled to the working
                                            interest and net revenue interest attributable to the EPR. Over the life of the enhanced
                                            well, unit or field, on a monthly basis, Farmor shall pay Farmee the monthly EPR of said
                                            well, unit or field. The EPR will be determined by subtracting IPR from the total production
                                            of the well, unit or field (EPR = Total Production - IPR).

 

For
example, if a particular well, unit or field is producing 400 bbls of oil per month (“BOPM”) at the commencement of the enhancement
operations, its initial IPR will be 400 BOPM. If, after the Farmee performs production enhancing operations on a well, unit or field
that affect said well, and the production increases to 500 BOPM, then Farmor shall receive its 400 BOPM of the production, subject to
its decline curve, and Farmee shall receive 100 BOPM of the production.

 

It
is specifically agreed to and understood that, in addition to the IPR revenue described above, Farmor shall own and retain a one (1%)
percent interest in the net revenues attributable to the Farmee’s EPR, subject to production taxes, marketing expenses and other
standard deductions to net revenue.

 

		4.	Monthly
                                            Price Determinations. The payments made to Farmor and Farmee based on the IPR and EPR
                                            on a monthly basis shall be based on the price received for oil and/or gas for the particular
                                            month in which that production was sold. For example, if the unit made 400 BOPM prior to
                                            any enhancing operations being performed, and the price received for the oil that month was
                                            $60 per bbl, then the revenues Farmor would equal, being $24,000 ($60 x 400 BOPM), subject
                                            to production taxes, marketing expense and other standard revenue deductions. If, after Farmee
                                            performs production enhancing operations on said unit, and the production increases to 500
                                            BOPM, then Farmee shall receive gross revenues of $6,000 ($60 x 100 BOPM), subject to production
                                            taxes, marketing expense and other standard revenue deductions. EPR and IPR may both change
                                            over time, but not necessarily at the same rates, or in the same directions, and such changes
                                            will be estimated and calculated by a mutually agreed registered petroleum engineer

 

    	 

     

    

 

	US Energy Corp.	Date
	Farmout Agreement	 
	Page 3	 

 

		5.	Revenue
                                            Collection and Disbursement. As operator of the Farmout Properties, Farmor shall continue
                                            to collect 100% of the revenues, and pay 100% of the expenses for all wells, units and fields
                                            situated in the Farmout Properties. On a monthly basis, as it otherwise distributes revenues
                                            to working interest owners, Farmor shall calculate the revenue due to Farmee based on the
                                            EPR, as it may be adjusted from time to time, of any well, unit or field that has been enhanced
                                            by Farmee, and pay to Farmee the gross revenue of said EPR, less all standard revenue deductions
                                            and associated expenses attributable to the portion of the gross revenues attributable to
                                            the EPR.

 

		6.	Operations.
                                            Farmee, as operator for all of the enhancement operations, shall pay all of its operating
                                            and capital costs for the enhancement of any well, unit or field. If Farmee commences enhancement
                                            operations with respect to any existing well, drills any new wells or otherwise takes over
                                            operations of any well, it will be liable for 100% (to its proportionate interest) of the
                                            plugging and abandonment costs for any such wells. Once the enhancement operations are complete,
                                            the Farmee and Farmor will agree on turning production operations back to the Farmor, with
                                            any amendments or agreements necessary or desirable to the existing operating agreements.

 

		7.	Conversion
                                            to Injection Well. Farmor and Farmee agree that Farmee has the right to convert any existing
                                            producing well into an injection well, any injection well into a producer, and use any producing
                                            or non-producing well for the purpose of enhancing the production of other wells in the unit
                                            or field. Once a well is taken over by Farmee for that purpose, then Farmee shall bear all
                                            risks and expenses of said well, from that point forward, including 100% of the plugging
                                            and abandonment costs. In addition, Farmee shall pay Farmor a monthly amount equal to the
                                            calculated IPR of that well, including its natural decline. When the originally estimated
                                            decline rates indicate that the well would not be producing in commercially paying quantities,
                                            the monthly fee shall cease.

 

		8.	Notice.
                                            Farmee agrees to notify Farmor at least thirty (30) days prior to the commencement of
                                            any enhancement operations for any particular well, unit, field or new or additional operation
                                            thereon. Such notification shall include a description of the anticipated operations. Farmee
                                            agrees to use commercially reasonable efforts to minimize any interference to or disruption
                                            of the current operations of the field. In return, Farmor agrees to use commercially reasonable
                                            efforts to cooperate with Farmee to allow for said operations.

 

		9.	Access
                                            to Information. On written request by Farmee, Farmor shall make available to Farmee copies
                                            of all title opinions, abstracts of title and other title information in Farmor’s possession
                                            with respect to the Farmout Lands; provided, however, furnishing such items shall not be
                                            construed as a warranty or representation by Farmor of title or ownership. Any curative work
                                            or additional title examination required by Farmee shall be conducted by Farmee at its sole
                                            cost and risk. Farmee shall also provide Farmor with a copy of all curative work and title
                                            information resulting from any additional title examinations conducted by Farmee. Farmor
                                            shall also provide Farmee access to all well files, engineering and geophysical data in its
                                            possession with respect to any operations proposed hereunder.

 

    	 

     

    

 

	US Energy Corp.	Date
	Farmout Agreement	 
	Page 4	 

 

		10.	Access
                                            to Operations. Farmee, and if applicable, its contractors and subcontractors shall be
                                            entitled to exercise all of Farmor’s rights of ingress and egress pertaining to the
                                            Farmout Lands for the purpose of conducting operations. Farmor shall advise Farmee of any
                                            unusual limitations or restrictions on ingress or egress, known to Farmor, and Farmee and,
                                            if applicable, its contractors and subcontractors shall comply with such limitations or restrictions.
                                            During Farmee’s operations Farmor and Farmor’s representatives shall have access
                                            at all times to the worksite, for the purpose of observation, at Farmor’s sole risk
                                            and liability.

 

		11.	AMI
                                            and Participation Right

 

		a.	.
                                            AMI Upon the execution hereof, the Farmee and Farmor shall establish the Area of Mutual Interest
                                            equal to halo of one (1) mile around the Farmout Properties, (“AMI”).
                                            The term of the AMI shall continue through the Term. During the Term of the AMI, if an oil
                                            or gas lease, or other interest within the AMI is acquired by one Party (the “Acquiring
                                            Party”), the Acquiring Party shall notify the other Party (the “Non-Acquiring
                                            Party”) at least twenty (20) days prior to any such acquisition. The properties
                                            so acquired within the AMI shall become subject to the terms and conditions of this Agreement,
                                            and the Parties will promptly amend this Agreement to include such additional properties.

 

		b.	Participation
                                            Right. In the event that Farmee determines to (a) raise capital from independent third-party,
                                            or (ii) sells all or any portion of its rights hereunder to any independent third-party (expressly
                                            excluding, however, any grants that Farmee may obtain), Farmor shall have the right to participate
                                            for up to 20% (by value) of any such offer or transaction, on the same economic basis and
                                            terms as the independent third-party. Farmee shall give at least ten (10) days advance written
                                            notice to Farmor of any such third-party transaction, and Farmor must make its election to
                                            participate within that notice period. Farmor will be required to execute and deliver documents
                                            for any such third-party transaction substantially the same as the third-party capital provider,
                                            or the third-party purchaser.

 

		12.	Well
                                            Information. During Farmee’s operations, Farmee shall furnish to Farmor, upon written
                                            request, at no cost to Farmor, the following information pertaining to the any operations
                                            by Farmee on the Farmout Properties:

 

		(a)	Written
                                            notice of the time and date on which any well is spudded.

 

		(b)	A
                                            drilling report showing all formations encountered and the depths at which those formations
                                            were encountered.

 

		(c)	Written
                                            reports on all cuttings and cores taken in the well, along with representative samples of
                                            the cuttings and cores if requested by Farmor.

 

    	 

     

    

 

	US Energy Corp.	Date
	Farmout Agreement	 
	Page 5	 

 

		(d)	Reasonable
                                            advance notice of any production tests, pressure tests, cores and logs to be run in the well
                                            so that Farmor may witness the operations. Written report of such operations, when they are
                                            completed, shall be furnished to Farmor.

 

		(e)	Copies
                                            of all reports and other forms filed with any federal, state or local governmental authority
                                            concerning any well.

 

		(f)	A
                                            complete copy of the driller’s log and a complete copy of all electrical logs (if such
                                            logs are run), on a scale of not less than 2 inches per 100 feet, from the bottom of the
                                            surface casing to the total depth of the well.

 

		(g)	Copies
                                            of all fluid analyses and other reports or information obtained with respect to the well.

 

		(h)	If
                                            any well is completed as a well capable of production, Farmee shall, within 60 days of that
                                            completion, furnish Farmor with a statement of all costs of drilling, equipping and completing
                                            that well.

 

		13.	Tag-Along
                                            Rights. (A)There is no preferential purchase right in this Agreement nor in any applicable
                                            Operating Agreement. However, in the event that Farmor, its successors and assigns, should
                                            sell, assign, farmout, or otherwise dispose of all or part of the rights, interests, assets
                                            and properties that are governed by this Agreement, including but not limited to the units,
                                            and wells and leases (whether earned or not) and any and all wells, facilities and production
                                            equipment located thereon (the “Contract Interests”) owned by Farmor (sometimes
                                            called the “Selling Party”), the following shall apply:

 

		(a)	Subject
                                            to the provisions of this Section 13(a), Farmor will cause the purchaser of the Contract
                                            Interests to offer to acquire that portion of the interests of Farmee and its successors
                                            and assigns in the units and wells and all related equipment and facilities owned by Farmee
                                            (the “Tag-Along Parties”) based on the evaluation by a third-party independent
                                            petroleum engineer as to the relative values of the IPRs and EPRs of the applicable Farmout
                                            Properties at the time of the sale;

 

		(b)	Should
                                            the Selling Party’s Contract Interests be only a portion of a larger transaction by
                                            the Selling Party, then the allocation of value given to the Selling Party’s Contract
                                            Interests by the third-party purchaser shall be the basis for establishing the value of the
                                            Tag-Along Parties’ Contract Interests, which shall be confidential and not disclosed
                                            to the Tag-Along Parties.

 

		(c)	Subject
                                            to appropriate confidentiality, the Selling Party will keep the Tag-Along Parties reasonably
                                            apprised of the status of negotiations with the proposed purchaser, but the offer, if any,
                                            for the Tag-Along Parties’ Contract Interests, will be made by the proposed purchaser.
                                            If a Tag-Along Party receives a binding offer from the proposed purchaser, such Tag-Along
                                            Party will have five (5) business days to consider the offer and either accept it or reject
                                            it. If such Tag-Along Party fails to accept or reject the offer within such period, it will
                                            be deemed to have rejected the offer.

 

		(d)	The
                                            rights of the Tag-Along Party, under this Section 13(a), shall continue to apply if
                                            the Selling Party fails to consummate the transaction on the basis on which the offer was
                                            made, and this Section 13 shall apply to any future offer; and

 

		(e)	The
                                            provisions of this Section 13 shall be binding upon and inure to the benefit of the
                                            parties and their respective successors and assigns.

 

    	 

     

    

 

	US Energy Corp.	Date
	Farmout Agreement	 
	Page 6	 

 

13(B)
The provisions of Section 13(A) shall not apply in cases where any party wishes to mortgage its Contract Interests, or to
transfer title to its Contract Interests to its mortgagee in lieu of or pursuant to a foreclosure of a mortgage of its Contract
Interests or to dispose of its Contract Interests by transfer of its Contract Interests to, or merger, reorganization or
consolidation with, a subsidiary or parent company or any company or entity in which such party owns a majority of the ownership or
beneficial interests.

 

		14.	Confidentiality.
                                            Farmor shall not divulge any information obtained from Farmee’s operations under the
                                            terms of this Agreement to any person or entity other than any representative, accountant,
                                            potential investor or investor, potential lender or lender, consultant, or officer or employee
                                            of Farmor that agrees that the information obtained from Farmee ‘s operations hereunder
                                            are proprietary and are, in many instances, trade secrets and that such person or entity
                                            shall not disclose such information to any other person or entity except, (i) to the extent
                                            the information was already in the public domain, (ii) to any party owning an interest in
                                            the unit or well, and/or (iii) to the appropriate governmental authority(s) as necessary
                                            or as required by applicable security laws or as may be required to be produced in legal
                                            proceeding; provided however, no public release of information may be made in compliance
                                            with applicable securities law, unless the releasing person has given the other Party prior
                                            written notice of such disclosure. Any Party desiring to make a press release or other public
                                            announcement concerning this Agreement or operations on the wells, units or fields shall
                                            allow the other Party to review and comment on the proposed language prior to the release
                                            of the press release of public announcement. The targeted formation will not be disclosed
                                            until after any well, unit or field actually has been drilled or the enhancement operations
                                            otherwise commenced in the unit or field.

 

		15.	Force
                                            Majeure. If a Party is rendered unable, wholly or in part, by Force Majeure, to carry
                                            out its obligations or rights under this Agreement, other than the obligation to make any
                                            payments due hereunder, the obligations of that Party, so far as they are affected by Force
                                            Majeure, shall be suspended from the inception and during the continuance of the inability,
                                            and the cause of the Force Majeure, as far as possible, shall be remedied with commercially
                                            reasonable diligence. The Party affected by Force Majeure shall provide the other Party with
                                            prompt written notice of the Force Majeure event, with reasonably full detail of the Force
                                            Majeure after the affected Party learns of the occurrence of the Force Majeure event. The
                                            settlement of strikes, lockouts and other labor difficulty shall be entirely within the discretion
                                            of the Party having the difficulty and nothing herein shall require the settlement of strikes,
                                            lockouts, or other labor difficulty. As used herein, “Force Majeure” means any
                                            cause or condition not within the reasonable control of the Party claiming suspension and
                                            which, by the exercise of reasonable diligence, such Party is unable to prevent or overcome,
                                            and without limiting the generality of the foregoing, such shall include delays or inabilities
                                            to obtain requisite permits to conduct the operations contemplated hereunder, but excluding
                                            any cause or condition due to economic or financial conditions.

 

    	 

     

    

 

	US Energy Corp.	Date
	Farmout Agreement	 
	Page 7	 

 

		16.	Notices
                                            and Well Information. All well data, information and notices to be given to Farmor as
                                            provided in this Agreement, and all other notices from one party to the other, shall be given
                                            shall be in writing and shall be deemed conclusively to have been duly given if personally
                                            delivered, sent by nationally recognized, receipted overnight courier, or mailed by registered
                                            mail, postage prepaid, and return receipt requested or transmitted by facsimile and confirmed
                                            by a similar mailed writing to the addresses as follows:

 

	If to Farmor:	U.S. Energy Corp.
	 	Attn: Ryan Smith
	 	675 Bering, Suite 390
	 	Houston, TX 77057
	 	Facsimile: ________________
	 
	If to Farmee:	Synergy Offshore, LLC
	 	Attn: Duane H. King
	 	9821 Katy Freeway. Suite 805
	 	Houston, Texas 77024
	 	Facsimile: 713-827-9989

 

		17.	Right
                                            to Repurchase. It is agreed to and understood that Farmee shall have the right to purchase
                                            back from Farmor, any unit or field on the Farmout Properties for which Farmee has given
                                            written notice pursuant to Paragraph 8 hereof that it will commence enhancement operations,
                                            and Farmee, in fact, commences such operations, and the unit or field has been affected by
                                            production enhancement operations performed by Farmee. The price of said purchase shall be
                                            based on the greater of PV-10 value of said unit or field, based on its current IPR at (i)
                                            the prevailing commodity price at the time of purchase or (ii) flat pricing of $65.00 per
                                            barrel oil and $3.25 per mcf natural gas (the “Repurchase Right”). For
                                            so long as Sage Road Capital, LLC or any of its affiliates (“Sage Road”)
                                            has the right to appoint a member of the board of directors of Farmor, if (and only if) the
                                            proposed purchase price for the sale to Farmee of the applicable Farmout Properties is less
                                            than the Repurchase Price, the sale of such Farmout Properties to Farmee shall be subject
                                            to the affirmative approval by the disinterested members of the Board of Directors of the
                                            Company. For clarity, Farmor and Farmee may not amend the terms of this Section 17 after
                                            the closing of the transactions contemplated by the PSA and the execution of this Agreement.
                                            After said purchase is complete, Farmee may take over as operator of said properties, or
                                            have Farmor continue to operate and oversee said properties as a contract operator for Farmee.

 

    	 

     

    

 

	US Energy Corp.	Date
	Farmout Agreement	 
	Page 8	 

 

		18.	Miscellaneous.

 

		a.	Governing
                                            Law. This Agreement shall be construed in accordance with the laws of the State of Texas,
                                            without regard to choice of law principles.

 

		b.	Entire
                                            Agreement. This Agreement, together with all Exhibits hereto, constitutes the entire
                                            agreement between the Parties as to the subject matter herein and supersedes all prior negotiations
                                            or agreements pertaining to such.

 

		c.	Relationship
                                            of the Parties. With respect to this Agreement, each Party shall not be considered the
                                            agent, partner, employee or fiduciary of any other Party, nor shall this Agreement be construed
                                            as creating a mining partnership, joint venture or other partnership or association. Each
                                            Party shall be responsible only for its obligations as provided in this Agreement and shall
                                            be liable only for its proportionate share of the costs of performing its obligations under
                                            this Agreement. All of the obligations and liabilities under this Agreement shall be several
                                            and not joint or collective. The Parties elect not to be treated as a partnership under the
                                            Internal Revenue Code of 1986 or under any Income Tax Laws of the state in which the lands
                                            covered hereby are located, and specifically elect to be excluded from all such provisions
                                            hereof.

 

		d.	Compliance
                                            with Laws. This Agreement and all operations hereunder shall be subject to all valid
                                            and applicable Federal and State laws, and all valid and applicable orders, laws, rules and
                                            regulations of any Federal or State authority having jurisdiction, but nothing contained
                                            herein shall be construed as a waiver of any right to question or contest any such law, order,
                                            rule or regulation in any forum having jurisdiction over the Farmout Properties.

 

		e.	Headings.
                                            The heading of the several paragraphs and/or sections of this Agreement are for convenience
                                            only and shall not control or affect the meaning or construction of the terms and provisions
                                            hereof.

 

		f.	Further
                                            Assurances. The Parties agree to execute, acknowledge and deliver any additional instruments,
                                            agreements or other documents and to do any other acts and things which may be necessary
                                            to more fully and effectively accomplish the intent of the Parties as set forth in this Agreement.

 

		g.	Counterparts;
                                            Facsimile Signatures. This Agreement may be executed by the Parties in any number of
                                            counterparts, each of which shall be deemed an original instrument, but all of which together
                                            shall constitute but one and the same instrument. Facsimile signatures are considered binding.

 

		h.	Exhibits.
                                            The Exhibits referred to in this Agreement are hereby incorporated in this Agreement by reference
                                            and constitute a part of this Agreement.

 

		i.	Costs
                                            and Expenses. All fees, costs and expenses incurred by a Party in negotiating this Agreement
                                            or in consummating the transaction shall be paid by the Party incurring the same, including,
                                            without limitation, engineering, land, title, legal and accounting fees, costs and expenses.

 

    	 

     

    

 

	US Energy Corp.	Date
	Farmout Agreement	 
	Page 9	 

 

If
the terms and conditions set out in this agreement are acceptable to you, please signify your acceptance by signing in the space provided
below. This agreement shall be effective as of the date hereof.

 

	Yours truly,	 
	 	 
	Synergy Offshore, LLC	 
	 	 
	/s/ Duane H. King	 
	By Duane H. King, CEO	 
	 	 
	AGREED TO AND ACCEPTED THIS 5 DAY OF January 2022
	 	 
	US Energy Corp.	 
	 	 
	/s/ Ryan Smith	 
	By: Ryan Smith	 
	CEO

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