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U.S. Energy Corp. Reports听Second Quarter 2025听Results听and Provides Operational Update

HOUSTON, Aug. 12, 2025 (GLOBE NEWSWIRE) -- U.S. Energy Corporation (NASDAQ: USEG, 鈥淯.S. Energy鈥� or the 鈥淐ompany鈥�), a growth-focused energy company engaged in the development and operation of high-quality producing energy and industrial gas assets, today reported financial and operating results for the three months ended听June 30, 2025.

MANAGEMENT COMMENTS

鈥淯.S. Energy delivered significant progress in the second quarter of 2025 as we advance our transformation into an integrated industrial gas company,鈥� said Ryan Smith, Chief Executive Officer of U.S. Energy. 鈥淥ur Montana project continues to move forward with disciplined execution across upstream development, infrastructure design, and carbon management planning. The scale and strategic location of the Kevin Dome positions us as a leader in a high-growth segment of the energy sector鈥攐ne where we can generate strong economic returns while delivering meaningful local and environmental benefits.鈥�

鈥淲e have also advanced the design and planning of our initial processing facility, with construction expected to commence in the coming months. This facility is projected to deliver first revenues in the first half of 2026 from both the processing of our upstream production and carbon management initiatives. The captured CO鈧� stream will serve dual purposes鈥攕upporting carbon management and enabling enhanced oil recovery (EOR) on our legacy oil and gas assets鈥攃reating a vertically integrated platform that captures value across multiple segments. Our broader infrastructure is being designed to accommodate third-party volumes, positioning us for potential tolling agreements and regional expansion.鈥�

鈥淚n addition, we are pleased to release our initial third-party resource report, which confirms the vast potential of our Kevin Dome asset. Simply put, U.S. Energy controls one of the largest naturally occurring CO鈧� and helium deposits in the United States, with a highly strategic location capable of supplying multiple markets. With a clean capital structure and a high-margin, multi-revenue growth platform, we are executing a transformational strategy built for scalability, sustainability, and long-term shareholder value.鈥�

INDUSTRIAL GAS RESOURCE REPORT

The Company recently had an industrial gas resource report prepared by Ryder Scott for the volumes in place on its initial target development area across its Kevin Dome asset. The report concluded 1.28 billion cubic feet (鈥淏CF鈥�) of net helium resources and 443.8 BCF of net CO2 resources, contingent upon economics and future development. The gas concentrations used for the report were 0.4% - 0.5% helium and 84% - 85% CO2, reflecting the composition of the Company鈥檚 recent development activities.

听ADVANCING FULL-CYCLE INDUSTRIAL GAS DEVELOPMENT

The Company continues to achieve significant milestones while advancing the full-cycle development of its industrial gas assets across the Kevin Dome in Montana.听

Upstream Development

• Successfully drilled two additional industrial gas wells in late July, bringing the total to three high-deliverability wells in the CO鈧� and helium-rich Duperow Formation鈥攁ll expected to deliver strong economic returns.
• The three wells delivered a combined peak production rate of 12.2 MMcf/d, with premium gas composition of 0.47% helium and 85.2% CO鈧傗�攁 combination that underscores the exceptional quality, marketability, and revenue potential of the resource. After establishing peak output, the wells were restricted to maintain flows of approximately 8.0 MMcf/d before being strategically shut in to maximize value ahead of gathering system and infrastructure startup, setting the stage for a rapid, high-impact production ramp-up.
• No additional drilling is planned for the remainder of 2025, allowing focus on monetization opportunities and infrastructure build-out, with the next phase of upstream growth targeted for 2026.
• Strengthened carbon management platform with the acquisition of a Class II permitted injection well, enabling both CO鈧� sequestration and enhanced oil recovery opportunities.

Infrastructure听Development

• Advancing design for the first processing facility, targeting high-margin recovery of CO鈧�, helium, and natural gas from existing production, with capital deployment expected to begin in Q3 2025.
• Installation of the initial gathering system is scheduled to begin in Q3 and be completed by year-end, creating a direct path from wellhead to processing.
• Permitting, land access, and utility interconnections are progressing in parallel to ensure seamless operational startup.
• Once operational, facilities are expected to immediately generate diversified cash flow from upstream gas sales, helium recovery, and carbon management.

Carbon Management Initiatives

• Achieved sustained injection of 17.0 MMcf/d across two Company-owned wells, equating to an annual sequestration capacity of ~240,000 metric tons of CO鈧�.
• Progressing near-term EOR opportunities leveraging CO鈧� resources and nearby, Company-owned legacy hydrocarbon assets.
• Submitted an application for a new Class II injection well, with approval anticipated in August 2025.
• EPA Monitoring, Reporting, and Verification (MRV) plan is underway, with submission targeted for September 2025 and approval expected by Spring 2026, creating the potential to capture federal carbon credits.听

BALANCE SHEET AND LIQUIDITY UPDATE

As shown in the table below, U.S. Energy remained entirely debt-free throughout the second quarter, ending the period with approximately $26.7 million in available liquidity. This strong financial position enhances our ability to pursue growth opportunities with agility and underscores our commitment to maintaining a disciplined and flexible balance sheet.

SECOND QUARTER 2025 FINANCIAL RESULTS

The Company鈥檚 proved developed producing (鈥淧DP鈥�) oil and gas reserve base as of July 1, 2025 consisted of approximately 1.6 million barrels of oil equivalent (鈥淏OE鈥�) comprised of approximately 77% oil.听 The present value discounted at 10% (鈥淧V-10鈥�) of the Company鈥檚 reserves was approximately $22.3 million at SEC pricing, with assumed pricing of $70.48/bbl, $2.86/mcf, and $33.96/boe for oil, gas, and natural gas liquids, respectively.

Total hydrocarbon production for the second quarter of 2025 was approximately 48,816 BOE consisting of 69% oil production. Total oil and gas sales for the听second quarter of听2025 were approximately听$2.0 million, compared to听$6.1 million in the same quarter of 2024.听 This听decrease in production and revenue primarily reflects the effects of the Company鈥檚 divestiture program throughout 2024 and the decline in oil pricing.听Oil sales accounted for听91%听of total revenue听this quarter,听remaining flat when compared to the听second quarter of 2024.

Lease operating expenses (LOE) for the听second quarter of听2025 were approximately听$1.6 million, or听$32.14 per Boe,听compared to听$3.1 million, or听$27.69听per Boe, in the prior year.听The overall reduction in LOE is primarily attributable to fewer producing assets as a result of our asset divestitures.

Cash general and administrative (G&A) expenses for the听second quarter of 2025听were approximately听$1.7 million, up slightly when compared to听$1.6 million听reported in the second quarter of 2024. Compensation and benefits in the second quarter decreased 30% from the same period in 2024, offset by higher consultants and professional services.听These reductions to compensation and benefits听reflects our streamlined corporate overhead, offset by one-time costs associated with our business development efforts in Montana which we expect to stabilize in the next two quarters.

Adjusted EBITDA was ($1.2) million in the听second quarter of 2025, compared to adjusted EBITDA of听$1.1 million听in the听second quarter of 2024.听The Company reported a net loss听of $6.1 million, or a听loss of听$0.19 per diluted share, in the听second quarter of 2025.

ABOUT U.S. ENERGY CORP.

We are a growth company focused on the development and operation of high-quality energy and industrial gas assets in the United States through low-risk development while maintaining an attractive shareholder returns program.听We are committed to being a leader in reducing our carbon footprint in the areas in which we operate. More information about U.S. Energy Corp. can be found at www.usnrg.com.

INVESTOR RELATIONS CONTACT

Mason McGuire

[email protected]
(303) 993-3200
听

FORWARD-LOOKING STATEMENTS

Certain of the matters discussed in this communication which are not statements of historical fact constitute forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. Words such as 鈥渟trategy,鈥� 鈥渆xpects,鈥� 鈥渃ontinues,鈥� 鈥減lans,鈥� 鈥渁nticipates,鈥� 鈥渂elieves,鈥� 鈥渨ould,鈥� 鈥渨ill,鈥� 鈥渆stimates,鈥� 鈥渋ntends,鈥� 鈥減rojects,鈥� 鈥済oals,鈥� 鈥渢argets鈥� and other words of similar meaning are intended to identify forward-looking statements but are not the exclusive means of identifying these statements.

Important factors that may cause actual results and outcomes to differ materially from those contained in such forward-looking statements include, without limitation: (1) the ability of the Company to grow and manage growth profitably and retain its key employees; (2) the ability of the Company to close previously announced transactions and the terms of such transactions; (3) risks associated with the integration of recently acquired assets; (4) the Company鈥檚 ability to comply with the terms of its senior credit facilities; (5) the ability of the Company to retain and hire key personnel; (6) the business, economic and political conditions in the markets in which the Company operates; (7) the volatility of oil and natural gas prices; (8) the Company鈥檚 success in discovering, estimating, developing and replacing oil and natural gas reserves; (9) risks of the Company鈥檚 operations not being profitable or generating sufficient cash flow to meet its obligations; (10) risks relating to the future price of oil, natural gas and NGLs; (11)听risks related to the status and availability of oil and natural gas gathering, transportation, and storage facilities; (12) risks related to changes in the legal and regulatory environment governing the oil and gas industry, and new or amended environmental legislation and regulatory initiatives; (13) risks relating to crude oil production quotas or other actions that might be imposed by the Organization of Petroleum Exporting Countries and other producing countries; (14) technological advancements; (15) changing economic, regulatory and political environments in the markets in which the Company operates; (16) general domestic and international economic, market and political conditions, including the military conflict between Russia and Ukraine and the global response to such conflict; (17) actions of competitors or regulators; (18) the potential disruption or interruption of the Company鈥檚 operations due to war, accidents, political events, severe weather, cyber threats, terrorist acts, or other natural or human causes beyond the Company鈥檚 control; (19)听pandemics, governmental responses thereto, economic downturns and possible recessions caused thereby; (20) inflationary risks and recent changes in inflation and interest rates, and the risks of recessions and economic downturns caused thereby or by efforts to reduce inflation; (21) risks related to military conflicts in oil producing countries; (22) changes in economic conditions; limitations in the availability of, and costs of, supplies, materials, contractors and services that may delay the drilling or completion of wells or make such wells more expensive; (23) the amount and timing of future development costs; (24) the availability and demand for alternative energy sources; (25) regulatory changes, including those related to carbon dioxide and greenhouse gas emissions; (26) uncertainties inherent in estimating quantities of oil and natural gas reserves and projecting future rates of production and timing of development activities; (27) risks relating to the lack of capital available on acceptable terms to finance the Company鈥檚 continued growth; (28) the review and evaluation of potential strategic transactions and their impact on stockholder value and the process by which the Company engages in evaluation of strategic transactions; and (29) other risk factors included from time to time in documents U.S. Energy files with the Securities and Exchange Commission, including, but not limited to, its Form 10-Ks, Form 10-Qs and Form 8-Ks. Other important factors that may cause actual results and outcomes to differ materially from those contained in the forward-looking statements included in this communication are described in the Company鈥檚 publicly filed reports, including, but not limited to, the Company鈥檚 Annual Report on Form 10-K for the year ended December 31, 2024听and Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, and future annual reports and quarterly reports. These reports and filings are available at www.sec.gov. Unknown or unpredictable factors also could have material adverse effects on the Company鈥檚 future results.

The Company cautions that the foregoing list of important factors is not complete, and does not undertake to update any forward-looking statements except as required by applicable law. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on behalf of the Company are expressly qualified in their entirety by the cautionary statements referenced above. Other unknown or unpredictable factors also could have material adverse effects on the Company鈥檚 future results. The forward-looking statements included in this communication are made only as of the date hereof. The Company cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, the Company undertakes no obligation to update these statements after the date of this release, except as required by law, and takes no obligation to update or correct information prepared by third parties that are not paid for by the Company. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

FINANCIAL STATEMENTS

ADJUSTED EBITDA RECONCILIATION

In addition to our results calculated under generally accepted accounting principles in the United States (鈥淕AAP鈥�), in this earnings release we also present Adjusted EBITDA. Adjusted EBITDA is a 鈥渘on-GAAP financial measure鈥� presented as supplemental measures of the Company鈥檚 performance. It is not presented in accordance with accounting principles generally accepted in the United States, or GAAP. The Company defines Adjusted EBITDA as net income (loss), plus net interest expense, net unrealized loss (gain) on change in fair value of derivatives, income tax (benefit) expense, deferred income taxes, depreciation, depletion, accretion and amortization, one-time costs associated with completed transactions and the associated assumed derivative contracts, non-cash share-based compensation, transaction related expenses, transaction related acquired realized derivative loss (gain), and loss (gain) on marketable securities. Company management believes this presentation is relevant and useful because it helps investors understand U.S. Energy鈥檚 operating performance and makes it easier to compare its results with those of other companies that have different financing, capital and tax structures. Adjusted EBITDA is presented because we believe it provides additional useful information to investors due to the various noncash items during the period. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are: Adjusted EBITDA does not reflect cash expenditures, or future requirements for capital expenditures, or contractual commitments; Adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs; Adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments; although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and other companies in this industry may calculate Adjusted EBITDA differently than the Company does, limiting its usefulness as a comparative measure.

The Company鈥檚 presentation of this measure should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. We compensate for these limitations by providing a reconciliation of this non-GAAP measure to the most comparable GAAP measure, below. We encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view this non-GAAP measure in conjunction with the most directly comparable GAAP financial measure.