U.S. Energy Corp. Q2 FY2024 earnings call

• Closed initial helium/industrial gases transaction and letter of intent for complementary Montana acreage.
• Legacy oil and gas production impacted by severe weather, but LOE expected to normalize to low $20 per barrel or lower.
• Continued share repurchase program, repurchased ~200,000 shares in Q2, YTD repurchases >2% of outstanding shares.
• Focus on operational efficiency, balance sheet discipline, and responsible resource management, with aim to capitalize on market conditions for growth and shareholder returns.

Legacy Oil and Gas Assets: Net daily production was approximately 1,221 barrels of oil equivalent per day, with oil representing ~62% of total production and natural gas and NGLs each ~19%. Total oil and gas sales for the quarter were approximately $6 million, a decrease from $8 million in the same period last year due to a 38% reduction in volumes, partially offset by a 22% increase in realized prices. Lease operating expense for the second quarter was $3.1 million, equivalent to $27.69 per BOE, with a 18% reduction compared to Q2 2023. Helium and Industrial Gases Assets: Closed initial transaction targeting helium and other industrial gases in late June and entered letter of intent for complementary acreage in Montana. Two initial wells to be drilled in September with capital costs of $1.2 million to $1.8 million.

• LOE per BOE expected to revert to low $20 per barrel or lower as operations normalize.
• No specific guidance on Montana wells yet, results from first two wells expected in Q4.
• Continue share repurchase program going forward.

• Severe weather events impacting production and increasing LOE.
• Uncertainties in realizing expected returns from Montana helium assets until wells are drilled and producing.

Q: Jesse Sobelson asked about LOE normalization and G&A with Montana acquisitions.

A: Ryan Smith responded that weather in Q2 impacted LOE, expecting LOE per BOE to return to late 2023 levels, and G&A to trend down as they optimize legacy assets.

Q: Charles Meade asked about timing of PDP estimates for helium assets and follow-on CapEx.

A: Ryan Smith said resource estimates for helium assets will be available by end of year after drilling wells, and follow-on CapEx for Montana projects includes ~$8M-$9M for processing plant with half equity and half debt, ~$8M-$10M equity need from U.S. Energy over next 12 months.