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U.S. Energy Corp. Announces $48.1 Million 2012 Oil and Gas Capital Expenditure Budget

Sells Portion of Undeveloped Leasehold Interests in McKenzie and Williams Counties, North Dakota

Announces Initial Production Rate of 1,840 BOE/D From the Olson 8-5 #1H Well         

Provides Oil and Gas Operational Update

RIVERTON, Wyo., Dec. 20, 2011 (GLOBE NEWSWIRE) -- U.S. Energy Corp.
(Nasdaq:USEG) ("U.S. Energy" or the "Company"), today announced its
2012 capital expenditure budget and that its wholly owned subsidiary,
Energy One LLC ("Energy One") entered into an agreement with Brigham
Oil & Gas, L.P. ("Brigham") for the sale of a portion of its
undeveloped leasehold interests in McKenzie and Williams Counties,
North Dakota. The Company also announced the initial production rate
for the third completed well under the Zavanna, LLC ("Zavanna")
drilling program, and provided an operational update on its oil and gas
initiatives.

2012 Capital Expenditures Budget:

The Board of Directors has approved a $48.1 million oil and gas capital
expenditure budget for 2012. The Company has allocated an estimated
$24.9 million to be spent in its Eagle Ford drilling program with
Crimson Exploration in South Texas. Additionally, the Company has
allocated $18.4 million for its Rough Rider and Yellowstone / SE HR
programs with Brigham and Zavanna, respectively, in the Williston Basin
of North Dakota, with the remaining $4.8 million in Capex budgeted
towards the Company's drilling initiatives in the San Joaquin Basin of
California with Cirque Resources. A summary of the Company's projected
2012 Capex follows:

Eagle Ford Program: $24.9 Million

  --  Operational Objectives: Complete one gross (0.3 net) 2011 well in
      progress, drill and complete 11 gross (3.3 net) 2012 wells, and drill
      one additional gross (0.3 net) 2012 well.

Williston Basin Program: $18.4 Million

  --  Operational Objectives: Complete six gross (1.31 net) 2011 wells in
      progress, drill and complete ten gross (0.81 net) 2012 wells, and drill
      four additional gross (0.29 net) 2012 wells.

San Joaquin Basin Program: $4.8 Million

  --  Operational Objectives: Drill and complete three gross (1.2 net) 2012
      wells (depending on initial well success, which is unknown at this
      time).

Based on internal modeling, anticipated drilling and completion
schedules, and anticipated flow rates from historical and projected
well performance by region, the Company anticipates a 70% increase in
average daily production for 2012 compared to 2011. Actual timing of
drilling and completing wells, well performance and the anticipated
number of gross and net wells could vary in each of these cases.
Amounts budgeted for each regional drilling program are also subject to
change based on a number of factors including, but not limited to,
timing, well costs, drilling and completion success, availability of
capital and weather-related issues.

Anticipated well performance could also vary significantly from those
modeled internally. Furthermore, funds allocated for specific drilling
programs under the 2012 CAPEX budget will be re-allocated to other
drilling programs if initial results are below expectations.

U.S. Energy Corp. plans to fund its budget from cash on hand, cash flow
from operations, proceeds from the acreage sales described in this
release, borrowings under its secured revolving credit facility and the
possible sale of its apartment complex in Gillette, Wyoming, which was
recently listed with national real estate brokerage firm, Colliers
International.

Sale of Portion of Undeveloped Leasehold Interests:

Effective December 15, 2011, the Company sold an undivided 75% of its
"undeveloped" acres in the Rough Rider prospect to Brigham for $13.7
million. Under the terms of the agreement, the Company retained the
remaining 25% of its interest in the undeveloped acreage and its
original working interest in its 20 developed wells in the Rough Rider
prospect. Of these 20 wells, 18 are currently producing, one is
currently being completed and another is expected to be completed in
the coming weeks.

Under the terms of the agreement, Brigham has also agreed to commence
drilling operations for at least three gross wells in the Rough Rider
acreage for each calendar year of 2012 and 2013.

Option Agreement:

In addition to the abovementioned sale, the Company has entered into an
option agreement with an undisclosed party for the purchase of an
undivided 75% of its "undeveloped" acreage within the Yellowstone and
SE HR prospects under the Zavanna program in McKenzie County, ND. If
the option is exercised, the transaction is expected to close by
mid-January 2012. Under the terms of the agreement, the Company will
retain the remaining 25% of its interest in the undeveloped acreage,
and its original working interest and production in ten gross (2.3 net)
wells drilled and/or in progress to date. Of these ten wells, five are
currently producing, four wells have been drilled to depth and are
awaiting completion and one is currently drilling.

Operations Update:

Williston Basin, North Dakota - Rough Rider Program:


  --  The Kalil 25-36 #2H (infill) well is currently being fracture stimulated
      by the operator. The Company has an approximate 27% working interest
      ("WI") and a 22% net revenue interest ("NRI") in this well.
  --  The Lloyd 34-3 #2H (infill) well is scheduled to be completed subsequent
      to the operator completing the above mentioned Kalil well. The Company
      has an approximate 8% WI and a 6.8% NRI in this well.
  --  The Company averaged 781 net BOE/D during the month of November under
      this program.

Williston Basin, North Dakota - Yellowstone and SE HR Programs:


  --  The Olson 8-5 #1H well was completed with 35 fracture stimulation stages
      and had an early 24-hour flow back rate of 1,840 BOE/D on a restricted
      choke during drillout of the plugs, which consisted of approximately
      1,607 barrels of oil and 1,398 MCF of natural gas. The Company has an
      approximate 30% WI and 23% NRI in this well.
  --  Under the Precision Drilling rig program, Zavanna is currently drilling
      the Larsen 32-29 #1H (~27% WI / 21% NRI) in the horizontal leg of the
      wellbore and expects to continue to drill one well per month through
      June 2012.
  --  Under the current completions schedule for 2012, Zavanna anticipates
      fracing ten gross wells through August of next year.
  --  The Company averaged 271 net BOE/D during the month of November under
      this program.


Eagle Ford Shale, South Texas - Leona River / Booth-Tortuga Programs:


  --  The initial well on the Booth Tortuga prospect, the Beeler #1H well, is
      currently drilling in the horizontal leg of the wellbore. The well is
      planned to be completed with approximately 18 fracture stimulation
      stages. The Company has an approximate 30% WI and 22.5% NRI in this
      well.
  --  Upon completing the drilling of the Beeler well, the drilling rig is
      scheduled to move to the Leona River acreage block to drill the KM Ranch
      #2H well.
  --  The Company averaged 50 net BOE/D during the month of November from its
      Austin Chalk and Eagle Ford production under this program.
San Joaquin Basin, California - Moose Prospect:


  --  The initial test well in the Moose prospect was spud on November 28,
      2011 and is currently drilling towards the planned total depth of
      ~13,400 ft. The well is currently drilling forward at a depth of ~12,500
      feet. The Company has an approximate 40% WI and 32% NRI in the program.

U.S. Gulf Coast (Onshore)

The Bayou Bend well, located in southeastern Texas, was drilled by
Mueller Exploration to a depth of 11,265 feet and two prospective pay
zones (EY3 & EY4 channel sandstones) were encountered. Preliminary
production testing has occurred on the deepest prospective zone, the
EY4, which resulted in an indicated production rate of ~80 BOE/D and
624 MCF/D. The well is scheduled to be hooked up for production in
January 2012. Once the EY4 zone is depleted, the operator plans to move
up hole to test the EY3 (the primary objective) zone for productivity.
The Company has an approximate 13.5% WI and a 9.9% NRI in this well.

"With our sale announced today combined with an additional sale
anticipated to close by mid-January, we have aligned our 2012 CAPEX
budget with promising growth programs while maintaining a strong
balance sheet, stabilized base production, and continued significant
exposure in the Bakken and Eagle Ford plays," said Keith Larsen, CEO of
U.S. Energy. "We are confident that our operational programs and
capital allocation directives will produce tangible and positive growth
results, along with measurable production and reserve increases for the
Company's shareholders in 2012," he added.

Disclosure Regarding Forward-Looking Statement


This news release includes statements which may constitute
"forward-looking" statements, usually containing the words "will,"
"anticipates," "believe," "estimate," "project," "expect," "target,"
"goal," or similar expressions. Forward looking statements in this
release relate to, among other things, U.S. Energy's expected future
production rates and capital expenditures, its drilling of wells with
industry partners, its ownership interests in those wells and their
expected costs, the oil and natural gas targets or goals for the wells,
future capital expenditures and projects, and future production,
reserves, borrowing capacity and sale or joint venture transactions.
There is no assurance that any of the wells referenced in this press
release will be economic. Initial and current production results from a
well are not necessarily indicative of its longer-term performance. The
forward-looking 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, dry holes and other
unsuccessful development activities, higher than expected decline rates
from production wells, future trends in commodity and/or mineral
prices, the availability of capital, competitive factors, and other
risks described in the Company's filings with the SEC (including,
without limitation, the Form 10-K for the year ended December 31, 2010
and the Form 10-Q filed November 7, 2011), all of which descriptions
are incorporated herein by reference. 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.

About U.S. Energy Corp.

U.S. Energy Corp. is a natural resource exploration and development
company with a primary focus on the exploration and development of oil
and natural gas. The Company also owns the Mount Emmons molybdenum
deposit located in west central Colorado. The Company is headquartered
in Riverton, Wyoming and trades on the NASDAQ Capital Market under the
symbol "USEG".

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