Good morning. My name is Huey and I will be your conference operator today. At this time, I’d like to welcome everyone to the U.S. Energy Corporation’s Third Quarter 2012 Highlights, Operations, and Financial Results Conference Call. (Operator Instructions) I’d now like to turn the conference over to Mr. Reg Larsen, Director of Investor Relations of U.S. Energy Corporation. Sir, you may begin your conference.

Thank you. Good morning ladies and gentlemen, and thank you for being with 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 an operations update; and Steve Richmond, the Company’s recently appointed Chief Financial Officer, who will be providing a financial review for today’s call as well as Mark Larsen, President of the Company, who will be joining us for the Q&A. In terms of the agenda, we will provide you with an update on our operating initiatives for the quarter ended September 30, 2012 as well as the period subsequent to 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’d 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’s management. These and all statements other than statements of historical fact are forward-looking statements within meaning of Section 21-E of the Securities and Exchange Act of 1934 and Section 27-A 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 ended September 30, 2012, which we filed on Friday November 09, 2012. Our Form 10-K for the year ended December 31, 2011 and other filings with the SEC, all of which are incorporated herein by reference. I’d now 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 the quarter and nine months ended September 30, 2012 operational highlights. At September 30, 2012, the Company had participation in 79 gross or 14.88 net producing Wells, which include 62 gross Williston Basin Wells, three Gulf Coast Wells, 11 gross Austin Chalk Wells, and three gross Eagle Ford Wells. The Company produced 106,060 BOE during the three months ended September 30, 2012 with average daily net production during the quarter of 1,153 BOE per-day. During the nine months ended September 30, 2012 production totaled 336,880 barrels of oil equivalent, which is an average of 1,229 BOE per-day. The Company recognized $24.5 million in revenues during the nine months ended as compared to $22.1 million during the same period of the prior-year. The $2.4 million increase in revenue was primarily due to higher oil sales volumes in 2012 when compared to 2011. We continue to focus on increasing production, reserves, revenue and cash flow from operations while managing our level of debt and seeking out additional growth opportunities in the segment of our business. In that regard, we announced on September 21, 2012 that the Company entered into a purchase and sale agreement with an undisclosed seller to prior interest in producing Bakken and Three Forks formation wells and related acreage in McKenzie, Williams and Mountrail Counties, North Dakota. Under the terms of the agreement, the Company acquired working interests in 23 drilling units with an estimated 294,000 BOE in proved reserves for $2.3 million after adjusting for related revenue and operating expenses from the effective date through September 21, 2012. USEG’s working interest in the drilling units averages 1.45% and ranges from less than 1% to approximately 5%. There are currently 27 gross…

Thank you, Keith. During the three months ended September 30, 2012 we recorded a net loss of $1.9 million after taxes or $0.07 per share as compared to net income after taxes of $268,000 or $0.01 per share for the quarter ended September 30, 2011. During the nine months ended September 30, 2012 we recorded a net loss of $3.3 million after taxes or $0.12 per share as compared to a net loss after taxes of $2 million or $0.07 per share for the nine months ended September 30, 2011. Both the quarter ending September 30, 2012 and year-to-date earnings have been negatively impacted by onetime charges. During these nine months we have recorded approximately $4.2 million in non-cash impairments including $2 million impairment on Remington Village, $1.8 million impairment on our corporate aircraft and $523,000 ceiling test write-down on our oil and gas assets. In the financial and operational release that went out last Friday, we presented an EBITDAX table showing earnings before interest, income taxes, depreciation, depletion and amortization, accretion of discount on asset retirement obligations, non-cash impairments, unrealized derivative gains and losses, and non-cash stock compensation expense. We use this non-GAAP measure internally to manage our business and believe it is a valuable tool in measuring operating performance. EBITDAX was $9.8 million for the nine months ending September 30, 2012 an increase of 66% from $5.9 million for the same period of 2011. A reconciliation of EBITDAX to net income is presented in the earnings press release which was published on Friday, November 9 and is available on the Company’s website for review. Similar improvement is reflected in our cash flow from operations which increased from $2.4 million during the nine months ended September 30, 2011 to $9.3 million during the same period of 2012. As Keith…

Thanks, Steve. That concludes the prepared remarks that we have today. Operator, would you please open up the Q&A session.

Yes, sir. (Operator Instructions) Our first question comes from Curtis Trimble with Global Hunter Securities. Please go ahead, your line is open.

Hi, good morning everyone. Looking at Daniels County, in Montana, kind of first off, has the partner permitted that initial well that they committed to drill yet?

They have not.

And, I guess, looking at participation, uses of the capital for the fourth quarter; can you kind of benchmark maybe a range of capital expenditures expected and maybe number of wells that you would expect to participate in for the fourth quarter?

Probably in the neighborhood of $5 million to $7 million is what what's been in the last two months.

And number of wells maybe on a gross or net basis or maybe just put a range on that one.

Well, they’re predominantly probably going to be the Williston Basin wells, so probably 0.4 or 0.5.

Thank you very much.

All right. Thanks, Curtis.

Thank you, sir. Our next question comes from Jeffrey Connolly with Brean Capital. Please go ahead, your line is open.

Hi, good morning.

Good morning, Jeff.

You guys reached the pooled payout on the second group of Brigham wells in this recent quarter?

We have not – we have not reached payout on the first group either.

Okay. And then do you still expect the first group will be in the first quarter of 2013, or can you update us on when you expect the pooled payout to kind of hit?

Mid-year of 2013 and probably because of a large work-over that we had in the first group, both groups will payout at about the same time.

Okay. All right. Thank you.

Thanks, Jeff.

Thank you, sir. Our next question in queue comes from the line of George Gaspar. Please go ahead, your line is open. George Gaspar - Robert W. Baird & Co.: Can you talk about the forward expenditures on a more detail? Could you outline what you’re projecting in terms of drilling expenditures for the fourth quarter and at this point what your drilling program expenditure target is for 2013, and could you talk a little bit about how you expect to finance it?

Sure, George. First of all I think we’re going to spend somewhere in the neighborhood of $5 million to $7 million, the final part of November and December and that will predominantly and in fact all of it will be in the Williston Basin and that depends on weather and performance of the operators. So, probably 0.4 or 0.5 net wells. As far as our budget for next year, we're working on that currently with our partners and we will present that to our Board of Directors at our meeting in December for their approval. After that we will give guidance and put out what our budget is and what's been approved. George Gaspar - Robert W. Baird & Co.: Okay. Can you talk a little bit about what your assumptions are and where are you going to concentrate your effort next year relative to performance from the overview from this year?

Well, obviously we’re going to continue our program up in the Williston Basin and in fact we’re seeing additional non-op packages that are coming to us. It depends on how we do on these two possible completions down in this Texas program that we did with Mueller. We haven’t produced the wells yet, but they’re looking promising and if we do get some success there, there will be some additional development down there, and it’s just too early to tell down there. But obviously through our cash flow and through our debt, we feel that we’re well funded going into next year and we’ll stick to that. George Gaspar - Robert W. Baird & Co.: Okay. And then -- and my second question was going to be, on the two wells that you made reference to in Texas. Can you explain a little bit about, if I remember originally there was apparently just one well that looked like it had some potential, and then now you got two wells here suggesting currently, so could you suggest -- could you tell us a little bit about the depth, what you’re trying to do actually and try to bring these wells to some type of production?

Yeah, well we still have one Woodbine well, that we believe we’ve got some up dip if you well, that, that we plan on drilling that sometime in the future, maybe the first quarter. The other two were formations that were bit of a surprise when we were going after that down dip and we still have to do some testing, they’re both shallower, one is gassy and one is oily. George Gaspar - Robert W. Baird & Co.: Okay. And do you have any target on what you could maybe when you get a handle on what the potential might be there?

It’s just too early George to tell. I could guess, but I’d prefer that we wait for the results and then once we do some infill drilling then we’ll define both formations better. George Gaspar - Robert W. Baird & Co.: In terms of speaking about infill drilling there, how much of the – in terms of the shallower formation that you’re attempting to get a completion on how extensive is that shallower formation and the acreage that you have at this point in time?

That’s just too early to tell George, it’s not a seismic play and there are thin seams, they’re only 10 to 12 foot thick. So, we would just have to keep drilling it out until we find what the boundaries are on it. So, it’s just early to say. George Gaspar - Robert W. Baird & Co.: Okay. Thank you.

Thanks, George.

Thank you, sir. (Operator Instructions) I guess we have a follow-up question from George. Please go ahead, your line is open. George Gaspar - Robert W. Baird & Co.: All right, thank you. Keith, about the Eagle Ford, you mentioned about this well structure that apparently the Buda that …

Buda.

… Buda, excuse me – that’s apparently evident – potentially evident in acreage that you have under your control with your partners. Exactly how far – can you give us an idea how far are we – the indicated success in that formation is from where you might be able to drill?

Sure. What they did is they’ve drilled five wells now, which is an indication to me that they’ve had some success. And they are within a half a mile east of our boundary in the Booth-Tortuga area. George Gaspar - Robert W. Baird & Co.: Okay. All right. And what's the depth on that formation well to what you’ve drilled up to in the first wells?

It’s right below the Eagle Ford. George Gaspar - Robert W. Baird & Co.: I see.

So, we’re talking about [6,500] feet, something like that. George Gaspar - Robert W. Baird & Co.: Okay. And then a question on the real estate project, can you bring us up to date on what's going on there as far as your utilization, your occupancy and what your thoughts are going forward on that; is there any interest showing up and do you actually have it on the market yet, and could you talk a little bit about what your thoughts are in there?

Yeah, George this is, Mark. We have relisted the property. George Gaspar - Robert W. Baird & Co.: Okay.

We're focusing primarily right now on reduction of expenses associated with the property. I think we’ll have -- we will have some success there. The marketing effort again is early stage, but we’re going to put it out there, we see it as a non-core asset, and we will like to sell it. So, we’re moving in that direction, both on the sales side as well as cost reduction -- expense reduction. George Gaspar - Robert W. Baird & Co.: Okay, all right. And one question generally about, with the pressure on the stock here and to its current price level; is there any entertaining of the possibility of buying stock back, I know that, that’s different than drilling wells, but at this price level relative to your book, is that not a reasonable approach or is it just that the financial situation wouldn’t allow it to happen?

Well, George anything that we did right now, we would have to take that out of our debt facility. George Gaspar - Robert W. Baird & Co.: I see.

And I don’t think that we will be taking debt down to buyback our stock. We need that money to generate additional revenues in the drilling of the wells. George Gaspar - Robert W. Baird & Co.: Okay, all right. And can you just relate a little bit about, you talked about average pricing on a per barrel basis nine months a quarter, in this was it $72 range. How are prices, I know the market’s pulled back in WTI. How would you be looking at your average price today in the fourth quarter relative to third quarter, what kind of a dip would you have in there?

Of all things George, and you and I’ve talked about this before, we got hit in that third quarter with the differential from the Bakken prices to WTI. They got a size $20 plus for sometime in there and recently we’ve seen that narrow down and to even less than $5 a barrel. And so, if those prices hold and I think probably everybody is aware the unit trains that they put in and they’ve build a lot of capacity up there. They’re also putting in additional pipelines and they’re going to need it. They’re up to 700,000 barrels a day at Bakken wide. So those are the factors that are going to affect us as well as the price moving up and down, but I think we got down some time in July, August when we were only getting $65, $70 a barrel. That was even with us at $85 or $90 and additionally that’s why we and I believe others have had 600 barrels a day and an average price of about $90 on the floor and about $105 on the ceiling. So, we think we’re protecting our cash flow in that regard. George Gaspar - Robert W. Baird & Co.: I see. Okay, and as far as the view on forward pricing differential, do you think that it’s going to be narrower because of the ability to evacuate more oil out of the area by tanker, and it seems like it’s going that way. Does that influence the differential?

Sure it does. That’s all takeaway capacity influences and probably George, what we’re going to see is some areas of that spreads going to get bigger and then that’ll overbuild and it will narrow down because of the stories I’ve heard they’re going to take it up to over a million barrels a day and until that transportation constrainments taken care of once and for all, you’re probably going to see some volatility there. George Gaspar - Robert W. Baird & Co.: Okay. And then your production per day was of course in 1100 plus range. Was that impacted at all in the third quarter by work-over and what are you experiencing this quarter in terms of work-over that would tend to slow production. Give us some thoughts on that.

Well, now that we’re involved with the number of wells what we are seeing additional workovers as well as just the age of the wells. And in my opinion just looking back at it, I haven’t looked at it statistically, but we didn’t do a lot of workovers in the third quarter. Currently we don’t have a lot of workovers going on, but we’re bringing on – just putting on pump – some wells with Zavanna and of course your downtime there to install the pumps and so forth and you’re not going to have any oil until they get put on. So overall, I think we’re starting to get stable production. We are involved in enough wells where we can start building from here. These wells are going to be 20-year plus wells up in the Bakken and they’re going to have some workovers. But the LOEs on these – on the barrel per oil, we think it’s real reasonable. As I mentioned, just about the payout, probably mid-year next year on that first set of 10 wells with Brigham. It took a bit longer and what we’ve had anticipated, but once we get to that point and that’s just generating additional cash flow. So we’re pleased with what we’ve got. George Gaspar - Robert W. Baird & Co.: Okay. Right. Thank you.

Thanks, George.

Thank you, sir. And presenters, there appear to be no further questions at this time. Do you have any closing remarks?

Yeah, I’d like to end the call by stating that our drilling programs have remained very active through 2012 and expect steady drilling in 2013. We are working with our partners to develop our 2013 budget and proposed drilling schedule in order to provide the market with a look at our growth potential as we move into the next full-year of drilling and completing wells. We also have a tremendous opportunity to create value for our shareholders with the Mount Emmons project. I look forward to updating you on the progress, certain milestones are met. We’ve made significant strides in reducing the Company’s overhead and it’s our ultimate goal to continue to grow our portfolio of producing assets and to create long-term value for the company shareholders. I like to thank everybody in the audience for joining us today and we look forward to the next call.

Thank you, sir. This concludes today’s conference call. You may now disconnect.