SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 and 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported):
February 7, 2003 (February 7, 2003)
U.S. ENERGY CORP.
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Exact Name of Registrant as Specified in its Charter)
Wyoming 0-6814 83-0205516
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File No.) Identification No.)
Glen L. Larsen Building
877 North 8th West
Riverton, WY 82501
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (307) 856-9271
Former fiscal year end May 31; new fiscal year end December 31.
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(Former Name, Former Address or Former Fiscal Year,
if Changed From Last Report)
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ITEM 5. OTHER EVENTS
U.S. Energy Corp. reports that its Rocky Mountain Gas Inc. ("RMG")
subsidiary has signed an Option Agreement to acquire about 40,000 net acres of
undeveloped coalbed methane (CMB) properties in the Powder River Basin of
northeastern Wyoming. Under the terms of the agreement, RMG has until May 1,
2003 to complete its due diligence, raise sufficient capital to exercise the
option and enter into a definitive agreement for purchase and sale of the
subject properties.
The optioned properties include 10 completed wells defining the targeted
coals. A portion of the property offsets production from adjoining properties
belonging to other parties. Pipelines traverse portions of the properties and
all but 500 acres of the properties are held in fee (privately owned). RMG is
contacting an independent geologic consultant to provide volumetric reserve
analyses.
Additionally RMG is conducting exploration activities on RMG's properties
in the Montana portion of the Powder River Basin. A 4 well exploration program
is underway with 2 wells having been drilled and completed. Management is
encouraged by initial gas shows and an individual coal thickness of
approximately 50 feet. Complete results from the exploration program will
dictate the extent of follow-up pilot programs tentatively scheduled for later
this year. Two additional wells that were previously completed have undergone
further testing as required by the Bureau of Land Management. Water analysis and
production testing of these two wells have yielded positive preliminary results.
RMG is gearing up to expand the pace and scope of exploration and
development programs this year. Our production volumes are increasing at the
Bobcat, Wyoming project and as of February 5, 2003 we're selling gas for over
$4.00 per Million BTU (MMBtu) ($4.50 on February 5, 2003). The energy content of
our CBM gas is close to one MMBtu per Mcf (from .96 to .98 MMBtu in 1.00 Mcf)
For February 2003, we have a guaranteed price of $3.07 per MMBtu for the
first 1,000 MMBtu sold each day, and we are selling the balance at market
prices, now about 1,100 MMBtu per day. Going forward, we may or may not use the
guaranteed contract price mechanism to lock in prices on some or all production,
and will make this decision each month to balance our desire for price stability
with the need to maximize upside with market sales. RMG owns a 27.6% working
interest (22% net revenue interest) in the Bobcat project.
Although we are encouraged by the fact that prices have crossed back up
over the $4.00 per MMBtu level for the first time in over a year, we do expect
market prices will continue to reflect the negative price differential from
national prices. The $4.50 per MMBtu price on February 5, 2003, for example,
still was 28% less than the national average of $6.25 that day. There is no
guarantee that increased pipeline capacity planned or under construction will
eliminate the negative price differential or even significantly reduce it.
FORWARD LOOKING STATEMENTS
This Report on Form 8-K includes "forward-looking statements" within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). All statements other than statements of historical fact
included in this Report, are forward-looking statements. In addition, whenever
words like "expect," "anticipate" or "believe" are used, we are making
forward-looking statements.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
U.S. ENERGY CORP.
Dated: February 7, 2003 By: /s/ Daniel P. Svilar
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DANIEL P. SVILAR, Secretary
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