Production rate announcement from U.S. Energy Corp.

Source: U.S. Energy Corp. 

U.S. Energy Corp. (USEG) (the "Company"), today announced the initial production rate on the KM Ranch #2H well in its Eagle Ford Shale program, provided the results from the Woodbine Sub-Clarksville 7 project and provided an operational update.

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

•The KM Ranch #2H well in Zavala County, our second well in the Leona-River acreage block, was drilled to a total measured depth of 12,875 feet, including a 5,250 foot of perforated lateral, in the first quarter of 2012. The operator completed the well in August with 16 stages of fracture stimulation. The well had a peak 24-hour gross flow back rate of 511 BOE, which consisted of 457 barrels of oil and 326 MCF of natural gas. The Company has an approximate 30% WI and 22.5% NRI in this well and the overall program. 

U.S. Gulf Coast (Onshore) -- Woodbine Sub-Clarksville 7 Project:

•In May 2012, we acquired a 26.5% initial working interest in approximately 6,766 gross acres in the Woodbine Sub-Clarksville 7 project area in Northeastern Texas. The seven prospects were drilled back to back from June through August of 2012 and six of the seven test wells were dry holes. The Victor #1 well encountered hydrocarbons in the Woodbine formation while drilling, however the prospective zone watered out. The operator plans to drill an offsetting well targeting ~60 to 80' of sand which has been identified as up dip in the formation from seismic data. The well is anticipated to be drilled in the fourth quarter of 2012. 

•During the drilling of one of the prospects, a ~10' sand was encountered with core results indicating hydrocarbons. The operator is currently testing these findings to evaluate their potential for development. 

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

•The Witt 34-27 #1H well was drilled to its targeted depth in August, 2012. The well is scheduled to be fracture stimulated with approximately 35 stages late this month. The Company has an approximate 6.7% WI and 5.2% NRI in this well. 

•The Barker 24-13 #1H well is currently drilling in the horizontal portion of the well bore. The Company has an approximate 4.7% WI and 3.7% NRI in this well. 

"We continue to see improved results from our third completed well. Crimson has monitored nearby completion activity and has worked to develop the proper stimulation recipe that best applies to our acreage, including moving towards lateral lengths greater than 7,000' in the next phase of the program," stated Keith Larsen, CEO of U.S. Energy.

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