U.S. Energy Corp. Q1 FY2025 earnings call

• U.S. Energy's primary focus is the Montana Industrial Gas project, with workovers, flow testing, drilling new wells, infrastructure planning, and carbon management underway.
• Montana's winter limited field activity, but the most significant phase of initial development has launched, including workovers, flow testing, drilling new wells, infrastructure planning, and carbon management.
• Upstream development: Drilled first industrial gas well in Q4 2024, acquired 24,000 net acres in Kevin Dome, drilling two new development wells, with wells budgeted at ~$1.2 million each.
• Infrastructure: Processing plant at Kevin Dome expected to be completed in ~40 weeks at an estimated $15 million, to separate gas into helium and CO2 streams.
• Carbon management: U.S. Energy controls large CO2 deposits, expect to sequester ~250,000 metric tons of CO2 annually, drafting MRV plan to submit to EPA in July, and evaluating merchant CO2 sales.
• Legacy oil and gas assets: Affected by commodity price pullback, but still have value, with opportunistic divestitures ongoing.
• Capital return: Repurchased ~832,000 shares in 2025, representing ~2.5% of outstanding float.

Revenue for the first quarter was approximately $2.2 million, down from $5.4 million in the same quarter last year. Oil comprised over 80% of the revenue. Lease operating expense was $1.6 million (or $34.23 a BOE) compared to $3.2 million (or $29.02 per BOE) in the same quarter last year. Cash, general and administrative expense was $1.9 million for the first quarter of 2025, with normalized quarterly general and administrative costs expected to be approximately $1.6 million (an 18% reduction from last year). As of March 31, 2025, there was no debt outstanding on the $20 million revolving credit facility, and cash position was over $10.5 million. In the first quarter, $2.1 million was spent on acquiring acreage and an industrial gas well adjacent to acquired acreage.

• Processing plant CapEx is estimated at $15 million, expected to be completed in roughly 40 weeks.
• Capital plan is measured and achievable, initially funded by strong balance sheet and thoughtful capital strategy.
• Project is seen as transformational, positioning U.S. Energy as a first mover in industrial gas sector with non-replicable resource and location.

Actual results may differ from forward-looking statements due to various risks and uncertainties, including those described in periodic reports filed with SEC; commodity price volatility affecting legacy oil and gas assets.

Q: The cost of the processing plant, I believe that was higher than expectations of was your complications or higher cost factors involved?

A: No, there wasn't. The plant cost is fair and conservative. There are parts with lead time, but some parts' prices could come down. Completion timing is affected by weather, could be end of first quarter or beginning of second quarter.

Q: Can you kind of give us a big picture update on the helium markets or helium end markets pricing, demand, contract terms or anything significant change in that area?

A: End user base includes various industries, with semiconductors being a large growth driver. Pricing around $400 per Mcf for gas, higher for liquefied helium. Offtake agreements typically 2-5 years, some up to 10 years, but shorter terms preferred for optionality. Helium demand expected to keep growing.