In December 2012 the Company’s Board of Directors approved a $27.1 million oil and gas capital expenditure budget for 2013. The Company has allocated an estimated $7.1 million to be spent in the Williston Basin of North Dakota under its three current drilling programs. This amount is subject to upward adjustment depending on the pace of development with operators other than Brigham and Zavanna. Additionally, the Company has budgeted $20.0 million for the acquisition of producing properties with associated proven reserves in 2013 with a primary focus on the Williston Basin.
At this time, the Company has not budgeted any capital for its South Texas programs pending further analysis of nearby operators’ drilling results in the Eagleford, Buda and Pearsall formations. Several operators are drilling in close proximity to our Leona River and Booth-Tortuga prospects, which are operated by Crimson Exploration. Crimson has notified the Company that it wishes to continue monitoring results of the various formations before re-initiating operations in the prospects.
Actual timing of drilling and completing wells, well performance and the anticipated number of gross and net wells could vary in each region. 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.
Mount Emmons Molybdenum Project:
The Company has approved a budget of $5.4 million for the advancement of the Mount Emmons Molybdenum project. This includes operation of the water treatment plant, plant upgrades, continued permitting, the acquisition of Thompson Creek’s interest in the Highlands Ranch property, legal, and lobbying expenses.
As announced in November, the Company filed a Mine Plan of Operations (“Plan”) with the U.S. Forest Service (“USFS”) on October 10, 2012 in Delta, Colorado. The Plan is currently under review by the USFS as to its completeness. Upon acceptance by the USFS, the document with be released to the general public in its entirety.
U.S. Energy Corp. plans to fund its budget from cash on hand, cash flow from operations, borrowings under its secured revolving credit facility, the potential sale of its apartment complex in Gillette, Wyoming, and the potential sale of the Company’s corporate aircraft and related facilities.
“We are pleased to announce our 2013 CAPEX budget with a continued primary focus on North Dakota, which is one of the most active development regions in the U.S. Although our anticipated budget is very conservative, we have ample liquidity to increase the CAPEX budget should accelerated drilling activity take place amongst our operating partners,” stated Keith G. Larsen, CEO of U.S. Energy Corp. “We are realizing stabilized production from the majority of our wells in North Dakota and remain confident in the returns from this prolific play. We anticipate participating in four Three Forks formation wells in Q1 2013 and look forward to evaluating the results which could lead to an expansion of our reserves and drilling programs in the region,” he added. “We will also continue to monitor regional activity surrounding our participated Eagle Ford acreage in South Texas as well as our Daniels County, Montana acreage with the intent to initiate further development during 2013,” he continued.
Mr. Larsen continued, “Regarding our Mount Emmons project, the Company plans to devote considerable resources to the advancement of the property in 2013. We made considerable strides in advancing the project in 2012 with the filing of our Mine Plan of Operations in October 2012, and we look forward to entering the NEPA process in 2013.”
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”.