US ENERGY CORP

Our oil and gas properties are described below and under Item 8, Notes 5 and 16 of the Notes to Consolidated Financial Statements under the captions “Oil and Natural Gas Producing Activities” and “Supplemental Oil and Natural Gas Information (Unaudited)”, respectively.

Oil and Natural Gas Interests

Reserve estimates are based on average prices per barrel of oil and per Mmbtu of natural gas at the first day of each month of the 12-month period prior to the end of the reporting period. Reserve estimates as of December 31, 2024, 2023 and 2022 are based on the following average prices, in each case as adjusted for transportation, quality, and basis differentials applicable to our properties on a weighted average basis:

Presented below is a summary of our proved oil and natural gas reserve quantities, all of which are located in the United States, as of the end of each of our last three fiscal years:

Internal Controls Over Proved Reserve Estimates

Our internal controls over the recording of proved reserves are structured to objectively and accurately estimate our reserve quantities and values in compliance with the SEC’s regulations. Our process for managing and monitoring our proved reserves is delegated to On Point Resources, a third-party independent petroleum engineering company. Oversight is provided by management and the Audit Committee of our Board of Directors, as discussed below.

On Point Resources, Inc.'s President, Don Jacks has worked in the energy industry since 1981 and has been contracted by the Company to perform our proved reserve estimates since 2019. He holds a Bachelor of Science Degree and a Master of Science Degree in Petroleum Engineering from The University of Texas at Austin and has been a Registered Professional Petroleum Engineer in the state of Texas since 1992. He is also a member of the Society of Petroleum Evaluation Engineers (SPEE) and has been a chapter officer since 2005. Technical and engineering reviews of our assets are performed quarterly by Mr. Jacks and reported to our management. Data obtained from these reviews, in conjunction with economic data and our ownership information, is used in making a determination of estimated proved reserve quantities.

Our reserves are reviewed by our management quarterly and by the Audit Committee of our Board of Directors at least annually. Our management, which includes our Chief Executive Officer and Chief Financial Officer, is responsible for reviewing and verifying that the estimate of proved reserves is reasonable, complete, and accurate. The Audit Committee reviews a summary of the final reserves estimate and meets independently with Mr. Jacks separate from our management to discuss processes and findings in the reserve report. The Audit Committee can and does request reports and information from Mr. Jacks to independently verify values reported by the management team.

You should not place undue reliance on estimates of proved reserves. See “Risk Factors - Our estimated reserves are based on many assumptions that may turn out to be inaccurate. Any material inaccuracies in these reserve estimates or the relevant underlying assumptions will materially affect the quantity and present value of our reserves.” A variety of methodologies are used to determine our proved reserve estimates. The principal methodologies employed are reservoir simulation, decline curve analysis, volumetrics, material balance, advance production type curve matching, petrophysics/log analysis and analogy. Some combination of these methods is used to determine reserve estimates in substantially all of our fields.

The primary inputs to the reserve estimation process are comprised of technical information, financial data, ownership interests and production data. All field and reservoir technical information is assessed for validity when meetings are held with management, land personnel and third-party operators to discuss field performance and to validate future development plans. Current revenue and expense information is obtained from our accounting records, which are subject to their own set of internal controls over financial reporting. All current financial data such as commodity prices, lease operating expenses, production taxes and field commodity price differentials are updated in the reserve database and then analyzed to ensure that they have been entered accurately and that all updates are complete. Our current ownership in mineral interests and well production data are also subject to the aforementioned internal controls over financial reporting, and they are incorporated into the reserve database as well and verified to ensure their accuracy and completeness. Our reserve database is currently maintained by Don Jacks of On Point Resources, Inc. Mr. Jacks works with our personnel to review field performance, future development plans, current revenues and expense information. Following these reviews, the reserve database and supporting data is updated so that Mr. Jacks can prepare his independent reserve estimates and final report.

*Proved Undeveloped Reserves.*As of December 31, 2024, 2023 and 2022, we did not record any proved undeveloped (“PUD”) reserves due to the lack of an approved development plan for development of potential PUD reserves and uncertainty regarding the deployment of such capital that would be required to develop any PUD reserves.

*Oil and Natural Gas Production, Production Prices, and Production Costs.*The following table sets forth certain information regarding our net production volumes, average sales prices realized and certain expenses associated with sales of oil and natural gas for the years ended December 31, 2024, 2023 and 2022.

We encourage you to read this information in conjunction with the information contained in our financial statements and related notes included in this annual report on Form 10-K.

The following table provides a regional summary of our production for the years ended December 31, 2024, 2023 and 2022

*Drilling and Other Exploratory and Development Activities - Oil and Natural Gas.*The following table sets forth information with respect to development and exploratory activity on oil and natural gas wells in which we own an interest during the periods ended December 31, 2024, 2023 and 2022.The table below does not include industrial gas wells. The Company drilled one industrial gas well during the fourth quarter of 2024.

The number of gross oil and gas wells is the total number of wells we participated in, regardless of our ownership interest in the wells. The information above should not be considered indicative of future drilling performance, nor should it be assumed that there is any correlation between the number of productive wells drilled and the amount of oil and natural gas that may ultimately be recovered.

Present Activities. Since April 12, 2023, we have not drilled or participated in the drilling of any oil and gas wells, however, we are in the process of returning to production idle wells we acquired in 2022. The table above does not include industrial gas wells. The Company drilled one industrial gas well during the fourth quarter of 2024 and is expected to be completed in the first half of 2025.

*Oil and Natural Gas Properties, Wells, Operations and Acreage.*The following table summarizes information about our gross and net productive wells as of December 31, 2024.

Wells are classified as oil or natural gas wells according to the predominant production stream.

*Acreage.*The following table summarizes our estimated developed and undeveloped leasehold acreage for oil and natural gas (does not include industrial gas acreage) as of December 31, 2024:

For our non-operated properties, we are subject to lease expiration if the operator does not commence the development of operations within the agreed terms of our leases. In addition, our leases typically provide that the lease does not expire at the end of the primary term if drilling operations have commenced. As of December 31, 2024, all of our acreage is held by production.

Industrial Gas Assets

Excluded from tables above are our assets related to our industrial gas project. Through two acquisitions, one occurring on June 26, 2024, and another on January 7, 2025, we acquired approximately 168,000 acres on the Kevin Dome in Toole County, Montana. During the fourth quarter of 2024, we drilled and completed portions of our first well – Big Rose, which is currently being evaluated with additional completion procedures expected in first half of 2025. We also acquired a shut-in industrial gas well in connection with the Synergy acquisition and plan to complete and test that well in the first half of 2025. Additionally, we are planning to drill two new wells during the first half of 2025. We have not recorded any proven industrial gas reserves or resources attributable to our acquired acreage.

Real Estate

In April 2024, we sold three city lots covering 13.84 acres in Riverton, Wyoming. The proceeds from the sale, net of closing costs amounted to $139 thousand.

Office Space

As of March 13, 2025, we have leased office space for our Company headquarters in Houston, Texas of 11,000 square feet. The lease is described in greater detail in “Note 4. Leases”, to the footnotes to the financial statements included herein.

The Company believes its existing facilities and equipment are in good operating condition and are suitable for the conduct of its business.