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U.S. Energy Corp. Announces $50 Million Equity Financing Agreement

Posted on: Thursday, 13 April 2006, 15:00 CDT

RIVERTON, Wyo., April 13 /PRNewswire-FirstCall/ -- U.S. Energy Corp. , a natural resources exploration and development company, is pleased to announce the signing of a Standby Equity Distribution Agreement ("SEDA") with Cornell Capital Partners, LP of Jersey City, New Jersey ("Cornell"), under which Cornell has committed to provide up to $50 million of equity financing to USEG over the next 36 months. Each individual equity funding under the SEDA will be limited to a maximum amount of $5 million. Access to the SEDA financing is subject to USEG having an effective registration statement with the SEC for the securities underlying the SEDA.

Each equity funding under the SEDA will represent a sale to Cornell of newly-issued shares of common stock. Subject to the availability of an effective re-sale registration statement, USEG will determine whether and when to request an advance, and the amount of each advance (subject to the $5 million maximum within any 7-day interval).

Under the terms of the agreement, common shares will be sold to Cornell at a price equivalent to 98% of the lowest daily volume weighted average price ("VWAP") of USEG's common stock during the five trading days immediately following the date that USEG sends an advance notice to Cornell of USEG's request for an equity advance.

For further information, please see the Form 8-K filed today with the SEC by USEG.

Mark Larsen, President of U.S. Energy Corp commented, "We are pleased to finalize the arrangement for up to $50 million in equity financing with Cornell on terms that we consider favorable to USEG shareholders. With uranium prices now at $42.00 per pound, molybdic oxide prices in the mid-$20's per pound and gold prices at a 25-year high of more than $600 per ounce, we find ourselves at a unique time in our corporate history."

Keith Larsen, Chief Executive Officer of U.S. Energy Corp. added, "Given our significant equity holdings in Enterra Energy Trust, which will become unrestricted on June 1, 2006; and our current cash position of over $7 million, we do not need to raise any capital at the present time."

ABOUT U.S. ENERGY CORP. AND CRESTED CORP.

U.S. Energy Corp. and its majority-owned subsidiary, Crested Corp., are engaged in a joint venture to conduct various business operations as USECC. Through their subsidiaries, Sutter Gold Mining Inc., Plateau Resources Limited, Inc., U.S. Moly Corp, U.S. Uranium Ltd. and USECC, they own various interests or properties prospective for gold, uranium, vanadium and molybdenum.

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.

The profitable mining and processing of uranium and vanadium will depend on many factors: Obtaining properties in proximity to the Shootaring mill in southeastern Utah to keep transportation costs economic; delineation through extensive drilling and sampling of sufficient volumes of mineralized material, with sufficient grades, to make mining and processing economic over time; continued sustained high prices for uranium oxide and vanadium; obtaining the capital required to upgrade the Shootaring mill and add a vanadium circuit, and obtaining and continued compliance with operating permits.

The profitable mining and processing of gold will depend on many factors, including receipt of final permits and keeping in compliance with permit conditions; delineation through extensive drilling and sampling of sufficient volumes of mineralized material, with sufficient grades, to make mining and processing economic over time; continued sustained high prices for gold, and obtaining the capital required to initiate and sustain mining operations, and build and operate a gold processing mill.

We have not yet obtained feasibility studies on any of our mineral properties. These studies would establish the economic viability, or not, of the different properties based on extensive drilling and sampling; the design and costs to build and operate gold and uranium/vanadium mills; the cost of capital, and other factors. Feasibility studies can take many months to complete. We have not established any reserves (economic deposits of mineralized materials) on any of our uranium/vanadium or gold properties, and future studies may indicate that some or all of the properties will not be economic to put into production. The molybdenum property has had extensive work conducted by prior owners to establish the deposits of molybdenum, mine planning and other ancillary activities. This data will have to be updated to determine the viability of starting mining and milling operations. Obtaining mining and other permits to begin mining the molybdenum property may be very difficult, and, like any mining operation, capital requirements for a molybdenum mining operations will be substantial.

By making these forward-looking statements, the Companies undertake no obligation to update these statements for revision or changes after the date of this release.

U.S. Energy Corp.

CONTACT: Keith G. Larsen, CEO, or Mark Larsen, President, both of U.S.Energy Corp., +1-307-856-9271

Source: PRNewswire-FirstCall

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