August 16, 2007



RIVERTON, Wyoming (August 16, 2007) — U.S. Energy Corp. (NASDAQ Capital Market:  “USEG”) today announced record net earnings for the second quarter of 2007 totaling $59.3 million, or $2.65 per diluted share, compared with a loss of ($6.2 million), or ($0.34) per share, in the comparable prior-year period.  The significant earnings increase was primarily due to the sale of the Company's uranium assets to Uranium One for a pretax gain of $95.3 million.  (See for a full explanation of results.)

"U.S. Energy Corp. is in its best financial condition in the Company's history,” stated Keith Larsen, Chief Executive Officer of the Company.  “As a result of the sale of our uranium assets, the Company currently has approximately $86.7 million in working capital, which will principally be re-invested in new natural resource opportunities with the goal of duplicating similar gains in the future."


Results of Operations
The sale of U.S. Energy Corp.’s uranium assets to Uranium One generated net income before taxes of $95.3 million and $93.6 million for the three and six months ended June 30, 2007 respectively.  This represents increases in earnings before taxes of $101.5 million and $101 million, respectively, from the reported losses of the three and six months ended June 30, 2006.  Net earnings after taxes for the three and six months ended June 30, 2007 totaled $59.3 million and $58 million, respectively, or $2.95 and $2.94 per basic share ($2.65 and $2.63 per diluted share).  Operating revenues for the three and six months ended June 30, 2007 were comparable to those recorded during the six months ended June 30, 2006.

Operating costs and expenses increased during the three and six months ended June 30, 2007 by $6.0 million and $5.6 million, respectively, over those recorded during the three and six months ended June 30, 2006.  The increases were result of increased activity on the Company’s mineral claims and higher General and Administrative expenses, which increased by $4.9 million primarily as a result of employee compensation.

Liquidity and Capital Resources
The liquidity position of the U.S. Energy Corp. is the strongest it has ever been during the Company’s forty year history.  At June 30, 2007, the Company had $8.9 million in cash on hand, along with $92.9 million in marketable securities.  Current assets at June 30, 2007 approximated $110.3 million, compared with current liabilities of $23.7 million.  The Company’s working capital at June 30, 2007 totaled $86.7 million, and its current ratio was 4.7-to-1.0.

Current liabilities at June 30, 2007 consisted primarily of income taxes payable of $20.0 million (primarily related to the gain on sale of uranium assets), dividends payable of $2.1 million and accrued compensation relating to the retirement policy for executives of $1 million.  The current portion of long-term debt was $0.1 million.  This, along with the long-term portion of the Company’s debt of $0.3 million at June 30, 2007, resulted in total debt owed by the Company of $.04 million.

Second Quarter Conference Call/Webcast
When:                      Friday, August 17th at 12:00 PM EDT (10:00 AM MDT)

Dial-In Number:     (866) 257-9956 (Within US and Canada), (706) 645-9218 (International)

Replay Number:     (800) 642-1687 (Within the US and Canada), (706) 645-9291 (International). ID Number #13073592.  The replay will be available starting at approximately 2:00 PM EDT on August 17th and will be available for seven days through 11:59 PM EDT on Friday, August 24th.

Webcast:                 The live webcast can be accessed by going to  Web participants are encouraged to go to the site at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.

About U.S. Energy Corp.
U.S. Energy Corp. is a diversified natural resource company with interests in molybdenum, gold, and oil and gas.  As a transitional owner of assets, U.S. Energy Corp. acquires properties on favorable terms, adds value through the application of its expertise, and exits the investment through a joint venture or sale to a strategic buyer.  While the Company’s primary emphasis is upon investments in the natural resources sector, it is also broadening its business interests to include cash-flow-generating investments driven by surging growth created by energy and mining activity in the intermountain west region of the United States.

The Company is headquartered in Riverton, Wyoming, and its common stock is listed on The NASDAQ Capital Market under the symbol “USEG”.

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