U.S. Energy Corp. Q2 FY2025 earnings call

• Upstream development: Drilled 2 new industrial gas wells, advanced engineering on an acquired productive well, flow tested existing wells, made final investment decision on infrastructure, and made progress on carbon management. Peak rates of industrial gas wells reached ~12.2 MMcf/d. Ryder Scott report confirmed net contingent resources of 444 Bcf of CO2 and 1.3 Bcf of helium. - Carbon management: Control large CO2 deposits, recent injection testing at disposal wells, initiated EPA monitoring plan. - Legacy oil and gas: Focus on divestitures, maintaining capital discipline. - Financials: Revenue down due to divestitures, lease operating expense decreased overall but increased on a BOE basis, cash G&A in line with expectations, balance sheet strong with no debt on credit facility and cash over $6.7 million, credit agreement renewed with covenant waivers for Q1 2026.

In the second quarter of 2025, revenue was approximately $2 million, down from $6 million in the same quarter last year. Oil comprised over 90% of the revenue. Lease operating expense for the quarter was $1.6 million ($32.14 a BOE), compared to $3.1 million ($27.69 per BOE) in the same quarter last year. Cash, general and administrative expense was $1.7 million. As of June 30, 2025, there was no debt outstanding on the $20 million revolving credit facility, and cash position was over $6.7 million. The credit agreement was renewed to May 31, 2029, with covenant waivers for the first quarter of 2026 as the company achieves profitability on its industrial gas operations.

• Renewed credit agreement extends to May 31, 2029, with covenant waivers for Q1 2026 as industrial gas operations become profitable. - 2026 expected to be a breakout year as the Montana industrial gas project comes online.

Q: Charles Meade asked about the resource report details, specifically if anything surprised Ryan Smith in the resource report.

A: Ryan Smith said he wasn't surprised as the numbers were in line with what they expected, though there could be upside as they develop more of the structure.

Q: Charles Meade followed up on commercial offtake agreements, asking about goals for different streams and time frames.

A: Ryan Smith said CO2 can be monetized via EOR, permanent sequestration, etc., and they aim to control offtakes, with helium offtake agreements expected by end of year, and CO2 merchant sales actively worked on.

Q: Thomas Kerr asked about helium concentration variation and economic viability.

A: Ryan Smith said helium concentrations had some variation but were still economically viable for the full cycle program.

Q: Thomas Kerr asked about changes in the processing plant development.

A: Ryan Smith said there were changes due to EOR and sequestration incentives making some processes simpler and cheaper, fine-tuning the economic model and construction planning.