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1. Company Snapshot

1.a. Company Description

U.S. Energy Corp., an independent energy company, focuses on the acquisition, exploration, and development of oil and natural gas properties in the continental United States.It holds interests in various oil and gas properties in the Williston Basin in North Dakota; the Permian Basin in New Mexico; and Texas.As of December 31, 2021, the company had an estimated proved reserves of 1,344,626 barrel of oil equivalent; oil and natural gas leases covered 89,846 gross acres and 5,757 net acres; and 146 gross producing wells.


U.S. Energy Corp.was incorporated in 1966 and is based in Houston, Texas.

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1.b. Last Insights on USEG

The recent 3-month performance of U.S. Energy Corp. was negatively impacted by a lack of significant operational updates and a decline in investor interest. The company's Q4 2024 earnings release was met with a lukewarm response, with investors seeking more substantial growth prospects. The absence of a clear strategy for expanding its industrial gas and carbon capture platform has contributed to the company's stagnant stock price.

1.c. Company Highlights

2. U.S. Energy Corp's Q2 2025 Earnings: A Step Closer to Industrial Gas Production

U.S. Energy Corp reported a revenue of $2 million for the second quarter of 2025, a figure largely influenced by the divestitures the company made in late 2024. The company's lease operating expenses stood at $1.6 million, translating to $32.14 per BOE. Cash, general, and administrative expenses were $1.7 million, with the CFO, Mark Zajac, attributing the higher than usual cash SG&A expenses to business development in Montana, including one-time costs such as consulting fees, legal work, and permit acquisition. The company's EPS came in at -$0.19, missing estimates of -$0.06.

Publication Date: Sep -04

📋 Highlights
  • Confirmed Industrial Gas Resources:: Ryder Scott assessed 444 BCF CO2 and 1.3 BCF helium, enhancing project value.
  • Construction Strategy Adjustment:: Delayed Kevin Dome plant to adopt simpler, lower-cost EOR methods, optimizing economic outcomes.
  • Financial Position:: $6.7M cash reserves post-acquisitions, with $2M revenue and $3.3M total operating expenses (Q2 2025).
  • Credit Agreement Renewal:: Extended to May 2029 with covenants waived for Q1 2026, ensuring liquidity during growth phase.
  • 2026 Strategic Targets:: Aim for helium offtake agreements by year-end and merchant CO2 sales to West Coast markets.

Operational Highlights and Progress

The company's Montana-based industrial gas project made significant strides during the quarter, completing its initial development program, which included drilling two new wells and securing a final investment decision on infrastructure. An independent resource assessment by Ryder Scott confirmed net contingent resources of 444 billion cubic feet of CO2 and 1.3 billion cubic feet of helium, underscoring the project's potential. The company is now on track to start construction of its Kevin Dome processing plant in September.

Strategic Developments and Outlook

Ryan Smith, CEO, highlighted the project's unique value proposition, citing its low environmental footprint compared to other helium production methods and its strategic alignment with growing demand for sustainable solutions. The company is targeting helium offtake agreements by the end of the year and is actively exploring merchant CO2 sales into the West Coast market. As per Mark Zajac, the company has renewed its credit agreement, extending it to May 31, 2029, and has secured covenant waivers for the first quarter of 2026 as it nears profitability on its industrial gas operations.

Valuation and Growth Prospects

With a P/S Ratio of 2.94 and an EV/EBITDA of -3.08, the market seems to be pricing in significant growth prospects for U.S. Energy Corp. Analysts estimate next year's revenue growth at 33.7%, indicating a potential turnaround in the company's financial performance. However, the current ROE of -77.45% and ROIC of -54.78% suggest that the company still has a long way to go in terms of achieving profitability.

3. NewsRoom

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U.S. Energy Corp. (USEG) Q2 2025 Earnings Call Transcript

Aug -12

Source: seekingalpha.com

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U.S. Energy Corp. Reports Second Quarter 2025 Results and Provides Operational Update

Aug -12

Source: globenewswire.com

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U.S. Energy Corp. Announces Second Quarter 2025 Results Conference Call Date

Aug -07

Source: globenewswire.com

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U.S. Energy: Inching Closer To Helium Production

Jun -19

Source: seekingalpha.com

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US Energy (USEG) Q1 2025 Earnings Call Transcript

May -12

Source: seekingalpha.com

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U.S. Energy Corp. Reports First Quarter 2025 Results and Provides Operational Update

May -12

Source: globenewswire.com

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U.S. Energy Corp. Announces First Quarter 2025 Results Conference Call Date

May -08

Source: globenewswire.com

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U.S. Energy Corp. Announces Acreage Acquisition and CCUS Development Update

Apr -16

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.83%)

6. Segments

Oil

Expected Growth: 4.83%

U.S. Energy Corp.'s 4.83% growth in oil production is driven by increased drilling activities in the Permian Basin, improved well productivity, and enhanced oil recovery techniques. Additionally, the company's strategic acquisitions and divestitures have optimized its asset portfolio, leading to higher output and efficiency gains.

Natural Gas and Liquids

Expected Growth: 4.83%

U.S. Energy Corp.'s Natural Gas and Liquids segment growth of 4.83% is driven by increasing demand for clean energy, improved drilling efficiencies, and strategic acquisitions. Additionally, favorable weather conditions, rising LNG exports, and growing industrial consumption also contribute to this growth.

7. Detailed Products

Crude Oil

U.S. Energy Corp. is engaged in the acquisition, development, and production of crude oil properties in the United States.

Natural Gas

The company explores, develops, and produces natural gas properties in the United States.

Natural Gas Liquids (NGLs)

U.S. Energy Corp. produces NGLs as a byproduct of natural gas production.

Oil and Gas Exploration Services

The company provides exploration services to identify and develop new oil and gas reserves.

Oil and Gas Production Services

U.S. Energy Corp. provides production services to optimize oil and gas production from existing wells.

8. U.S. Energy Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for U.S. Energy Corp. is medium due to the availability of alternative energy sources such as solar and wind power.

Bargaining Power Of Customers

The bargaining power of customers for U.S. Energy Corp. is low due to the lack of negotiating power of individual customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers for U.S. Energy Corp. is high due to the limited number of suppliers of critical materials.

Threat Of New Entrants

The threat of new entrants for U.S. Energy Corp. is low due to the high barriers to entry in the energy industry.

Intensity Of Rivalry

The intensity of rivalry for U.S. Energy Corp. is high due to the competitive nature of the energy industry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 10.02%
Debt Cost 6.68%
Equity Weight 89.98%
Equity Cost 6.68%
WACC 6.68%
Leverage 11.14%

11. Quality Control: U.S. Energy Corp. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
PEDEVCO

A-Score: 4.6/10

Value: 8.7

Growth: 7.3

Quality: 7.1

Yield: 0.0

Momentum: 0.5

Volatility: 3.7

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Talos Energy

A-Score: 4.1/10

Value: 9.2

Growth: 3.9

Quality: 4.6

Yield: 0.0

Momentum: 3.0

Volatility: 3.7

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Calumet Specialty Products Partners

A-Score: 4.0/10

Value: 9.8

Growth: 2.6

Quality: 5.6

Yield: 0.0

Momentum: 3.0

Volatility: 3.0

1-Year Total Return ->

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Vivakor

A-Score: 3.3/10

Value: 9.8

Growth: 6.4

Quality: 3.6

Yield: 0.0

Momentum: 0.0

Volatility: 0.0

1-Year Total Return ->

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Battalion Oil

A-Score: 2.8/10

Value: 9.7

Growth: 3.1

Quality: 3.7

Yield: 0.0

Momentum: 0.0

Volatility: 0.3

1-Year Total Return ->

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Stock-Card
USE

A-Score: 2.6/10

Value: 7.8

Growth: 2.2

Quality: 2.3

Yield: 0.0

Momentum: 2.5

Volatility: 0.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1.06$

Current Price

1.06$

Potential

-0.00%

Expected Cash-Flows