My name is Ben [ph], and I will be your conference operator today. At this time, I would like to welcome everyone to the U.S. Energy Corporation second quarter 2012 highlights operational results conference call. (Operator Instructions) Thank you. I would now like to turn the conference over to Mr. Reggie Larsen, Director of Investor Relations of the U.S. Energy Corp. Sir, you may begin your conference.

Thank you, Ben. Good morning ladies and gentlemen, and thank you for joining us today. Joining me this morning is Keith Larsen, Chief Executive Officer of the company, who will be providing an overview of the quarter and operations update; and Bryon Mowry, the principal accounting officer for the company who will be providing the financial review for today’s call. In terms of the agenda, we will provide you with an update on our operating initiatives for the quarter end of June 30, 2012 as well as the period subsequent quarter end. We will also conduct a financial review of the quarter and finish with question-and-answer portion of the call. As a preliminary matter, I would like to note that during this call, we may make forward-looking statements which may be identified by the words "will," "anticipate," "expect," and similar words that are based on the beliefs and assumption of U.S. Energy management. This and all statements under the statement of historical fact are forward-looking statements within meeting of Section 21E of the Securities and Exchange Act of 1934 and Section 27A of the Securities Act of 1933. The forward-looking statements are subject to numerous risk and uncertainties including those described in the Form 10-Q for the quarter end of June 30 of 2012 which we filed yesterday. Our Form 10-Q for the year ended December 31st, 2011 and our filings with the SEC, all of which are incorporated herein by reference. I now would like to turn the call over to Keith Larsen.

Thanks, Reg, and good morning ladies and gentlemen. I will begin the call with an overview of our quarter end of June 30th, 2012 operational highlights. At June 30th of 2012, the company has 48 gross, 13.96 net producing wells, which includes 32 gross in basin wells, 3 gross both coast wells, 11 drills up on Chuck wells and our Booth-Tortuga prospect and two gross Eagle Ford wells. The company produced 119,783 BOE during the three months ended June 30 of 2012 with average daily net production during the quarter of 1,305 BOE per day. This represents 16% increase from production volumes in the second quarter of 2011 and a 6% sequential increase from production volumes in the first quarter of this year. During the first six months of 2012, the company received an average cash flow of $2.1 million per month from its oil and gas production. Revenue from the sales of oil and gas were $8.5 million as compared to $7 million on the second quarter of 2011, an increase of 21%. Moving on to operations in the Williston Base of North Dakota under the Yellowstone program, we completed one drill in .04 net wells during the quarter. The State 36-1 well, which is the second fuel well in the state unit, was completed mid-June and have an initial production rate of 4,182 drills BOE per day. Two additional gross wells are anticipated to be drilled with [inaudible] during the balance of 2012. Drilling and completions continued under the Zavanna program during the quarter at an aggressive phase. During the quarter for gross .83 net wells were completed in the Yellowstone and SE HR prospects. The Skorpil #1 well had an early 24-hour flow back rate of 1,533 BOE per day. The Larsen #1 well had an early…

Thank you, Keith. Our operating revenues increased by $1.5 million to $8.5 million during the quarter end of June 30 of 2012. As compared to revenues of $7 million during the quarter end of June 30, 2011. This is a 21% increase when comparing the second quarter of 2012 to second quarter of 2011. Operating a revenue increase is primarily due to higher oil sales volumes. The sales volumes in natural gas and NGLs were lower as were the average sales price to the three sales products. Operating revenues for the second quarter of 2012 reflect an increase of 187,000 when compared to operating revenue realized during the first quarter of 2011. The increase is primarily due to the higher oil production during the second quarter of 2012. Production volumes for the three months ended June 30th, 2012 average approximately 1,305 BOE per day of 16% in the second quarter of 2011 and an increase of 6% in production volumes from the first quarter of 2012. Our average realized price is $71.74 per BOE was $3.15 for BOE higher during the second quarter of 2012 and then realized prices from the second quarter of 2011. But now, approximately $2.66 per BOE from the realized prices in the first quarter of 2012. Operating income from oil and gas operations was 1.4 million during the quarter end of June 30, 2012 as compared to the operating income of 1.9 million from oil and gas operations during the quarter ended June 30 of 2011. The decrease in earnings from oil and gas operations is primarily due to, a, $523,000 impairment taken and approved properties during the quarter; b, the increase of $603,000 in lease operating expenses; and c, net increase in our DD&A of $910. These increases in cost were partially offset by…

Thanks, Bryon. That concludes our prepared marks for the day. Operator, would you please begin the Q&A session?

Yes, sir. (Operator instructions) Your first question comes from the line of Noel Parks from Ladenburg Thalmann. Your line is open. Please go ahead. Noel Parks – Ladenburg Thalmann: Good morning.

Good morning, Noel. Noel Parks – Ladenburg Thalmann: Just a couple of things. I was looking at what you were talking about in the Eagle Ford as far as different completions and so forth, and general, does it seem like the frock intensity? And I guess was that the cause the effort? It’s kind of continuing to go up or is that flattening out and getting a little bit – are people starting to get more conservative, again, with the frocks?

Oh, quite honestly, no, we haven’t done enough to know the creek down there. But I’ve heard the same things that you have as they are getting some cost with people there in the Bakken. But with only having this one well this year, it’s a little difficult to compare with the other cause. Noel Parks – Ladenburg Thalmann: Sure. Okay. And we’re now aware, of course, of a lot of different acreage packages on the market out there. Do you have a sense of – I mean, for what you guys are comfortable with, have you heard about or seeing anything in the Eagle Ford that is in the ballpark of stuff you consider taking up a little bit of acreage on or–?

We have seen a lot. We’ve seen some of the cost. I think everybody has heard about just valuing their acreage of 30,000 to 50,000. But we’re not seeing a lot there. We have seen more packages in the Bakken that we’re taking a look at. Noel Parks – Ladenburg Thalmann: Okay. And I actually have to drop off for a minute, so I apologize if you guys addressed this. But just in general, the production has been a little bit lumpy. On a unit basis, should we be, if you just have any guidance from the cost side.

Oh, again, you saw some of our DD&A go up to the Bakken because of the cost paid. I think everybody is aware of that. I’ve heard recently that their costs are starting to come down. There’s more competition up there, some of the operators keep having a lower cost from their service providers. So, hopefully, we’re going to see some reduced cost out there. I think that we, in fact, need it for some of our lower EOR units to be developed, certainly, $10 million plus well. It’s pretty sketchy for economics. So, I think the costs are going to come down in the Bakken. And again, I can’t comment because we haven’t had a lot of experience yet in Eagle Ford. But I think cost will come down for the Bakken. Noel Parks – Ladenburg Thalmann: Okay. And as far as just GNA trend, any changes you foresee for the rest of the year?

We’re trying our best on the GNA. We’d like to continue our trend of reducing that. But it’s probably going to stay flat. Noel Parks – Ladenburg Thalmann: Okay. Great. That’s all I had. Thanks.

Thanks, Noel.

Thank you. Our next question comes from the line of Jeffrey Connolly from Sidoti & Company. Your line is open. Please go ahead. Jeffrey Connolly – Sidoti & Company: Hi guys.

Hey, Jeff. Jeffrey Connolly – Sidoti & Company: Hey. Have you received any additional FAEs from Crimson?

Except for the completion. Except for the completion, no, we have not. Jeffrey Connolly – Sidoti & Company: So, we’re going to wait until the KM Ranch is on before we know how many more of their plant drilling or – do you guys have any plan to plant one more this year?

We don’t currently have plans. But I’ve been talking to Allan. And if we’re successful, and I think he made a comment that we could accelerate the program depending on the success. Jeffrey Connolly – Sidoti & Company: Okay. And then can you just give us an update on the Woodbine Sub-Clarksville project?

What we’ve announced, Jeff, is we’re not going to announce any results until we complete our seventh well. And we’re currently drilling the sixth well. So, within the next couple of three weeks, then we will announce the full program. Jeffrey Connolly – Sidoti & Company: All right. Thanks, guys.

Yes, thanks, Jeff.

Thank you. Our next question comes from the line of Mike Wanco from Wanco Investment. Your line is open. Please go ahead. Mike Wanco – Wanco Investment: I guess you’re the only oil and gas company selling below bag of 50%. It was never stocked in the open market. The operating net sale you have, there’s no need for constant transportation but need a jet. You have lost money in 17 of the last 18 quarters totaling $21.5 million. It’s all about represent [inaudible]. Two questions, why should we think you or the board care about the stock price and why should the board not replacing that the stock price cannot get back to those value within a year or just sell the company?

I kind of addressed that. Would you – individually on many occasions. Operator, could you go to go the next question please?

Absolutely. (Operator Instructions) Our next question comes from the line of Barry Lake of Lake Investment. Your line is open. Please go ahead. Barry Lake – Lake Investment: Okay. Keith, I know at this time you’re not allowed to comment on Mount Emmons, but is there still some progress? Is the line of communications still open with the land exchange?

Yes, it is. We’re certainly not closing any doors. We thought that we would see a lot more support for the land exchange. And we’re hopeful that we will see more support and if they can get their situation together and have something that’s reasonable for our shareholders, we’ll still consider it. But in the meantime, and we told the other parties that we are going to move forward with permitting the land. Barry Lake – Lake Investment: Okay. But at this time the door is not close on it, it’s just at this time they haven’t’ presented anything to you, is that correct?

That’s correct. Barry Lake – Lake Investment: Okay. That’s all.

Okay.

Thank you. There are no further questions at this time. Do you have any closing remarks?

Yes. I’d like to end the call by stating that our drawing programs remain active to the midpoint of the year. We will have the full results of the Woodbine Sub-Clarksville seven projects and a few short weeks when we report the initial reports of our comprehensive evaluation of the program. We also look forward to reporting the results of the KM Ranch #2 well with Crimson upon evaluation of the important test drill in the participated program. The success of this well could be the turning point for drilling program next year and the potential growth driver for our company. We also continue to work with our partners and industry to seek our additional opportunities in the oil and gas sector while our active drilling programs continue to be developed. And we will continue to work towards preserving and creating the value that we see in the Mount Emmons project and we look forward to providing periodic updates on our progress and milestone in that. We like to thank our audience for joining us today and look forward to updating you in the future. Thank you.

This concludes today’s conference call. You may now disconnect.