U.S. Energy Corp. Provides Corporate Update
February 12 2016 - 12:02PM
U.S. Energy Corp. (NASDAQ:USEG) a Wyoming corporation, entered into
an Acquisition Agreement with Mt. Emmons Mining Company (MEM), a
subsidiary of Freeport-McMoRan Inc., whereby MEM acquired the
Company’s Mt. Emmons mine site located in Gunnison County,
Colorado, including the Keystone Mine, a related water treatment
plant and other related properties. Under the Acquisition
Agreement, MEM will replace the Company as the owner and permittee
of the water treatment plant, the associated mining assets and will
discharge the obligation of the Company to operate the water
treatment plant upon closing. Concurrent with entry into the
Acquisition Agreement, and as additional consideration for MEM to
accept transfer of the properties, including the water treatment
plant, the Company entered into a Series A Convertible Preferred
Stock Purchase Agreement, pursuant to which the Company issued
50,000 shares of newly designated convertible preferred stock with
a cumulative noncash dividend to MEM.
The transaction is a continuation of the transformation of U.S.
Energy Corp. to solely focus on its ongoing oil and gas business.
Previously, U.S. Energy Corp. announced a restructuring of the
company by reducing its overhead costs significantly, moving the
corporate headquarters to Denver for better access to financial
services and to improve access to oil and gas deal flow. U.S.
Energy Corp. intends to migrate from a traditionally non-operator
of oil and gas assets to an oil and gas operating company going
forward.
With the divestiture of the Mount Emmons Mining operations, U.S.
Energy Corp. will have eliminated its mining related operating
costs of approximately $3 million per year, a portion of which
relates to operation of the water treatment plant. Coupled with the
overhead reduction of $4 million at year end 2015, approximately $7
million savings can be realized on an annualized basis. The
reductions have been implemented to support the ongoing business
plan of U.S. Energy Corp. during this industry downturn and low
commodity price environment.
The company intends to focus on securing appropriate financial
funding to replace its current Reserve Based Lender along with
adding growth capital for potential oil and gas asset acquisitions.
U.S. Energy Corp. primarily owns interests in oil and gas assets in
the Williston Basin of North Dakota and South Texas Eagle Ford
Trend. The Company intends to evaluate properties in a variety of
basins where it has operating expertise.
Further, to address the stock listing compliance issue the
Company has entered into a continued listing agreement with NASDAQ
through June 2016.
Mr. David Veltri, Chief Executive Officer, stated, “This
transaction will end our mining activities and together with the
earlier reductions and savings will position U.S. Energy to execute
our strategy to transform the company to profitability and to grow
our oil and gas assets during 2016 and beyond.”
Disclosure Regarding Forward- Looking
Statement
This news release includes statements which may constitute
"forward-looking" statements, usually containing the words "will,"
"anticipates," "believe," "estimate," "project," "expect,"
"target," "goal," or similar expressions. Forward looking
statements in this release relate to, among other things, U.S.
Energy's expected future plans, including plans to reduce costs,
transition to an operating model and execute on its strategic plan,
potential future financing transactions and future growth.
There is no assurance that any additional financing or other
opportunities will be available. The forward-looking
statements are made pursuant to the safe harbor provision of the
Private Securities Litigation Reform Act of 1995.
Forward-looking statements inherently involve risks and
uncertainties that could cause actual results to differ materially
from the forward-looking statements. Factors that would cause
or contribute to such differences include, but are not limited to,
dry holes and other unsuccessful development activities, higher
than expected expenses or decline rates from production wells,
future trends in commodity and/or mineral prices, the availability
of capital, competitive factors, and other risks described in the
Company's filings with the SEC (including, without limitation, the
Form 10-K for the year ended December 31, 2014) all of which are
incorporated herein by reference. By making these
forward-looking statements, the Company undertakes no obligation to
update these statements for revision or changes after the date of
this release.
For Further Information, please contact:
David Veltri
CEO and President
U.S. Energy Corp.
303 993 3200
David@usnrg.com
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