Good morning. My name is Shannon and I will be your conference operator today. At this time, I would like to welcome everyone to the U.S. Energy Corp. year-end 2012's selected highlights, operations, and financial results conference call. (Operator Instructions) I would now like to turn the conference over to Mr. Reg Larsen, Director of Investor Relations of U.S. Energy Corp. Sir, you may begin your conference.

Thank you, Shannon. Good morning, ladies and gentlemen, and thank you for joining us today. With me this morning is Keith Larsen, Chief Executive Officer of the company, and Steve Richmond, the company’s Chief Financial Officer. In terms of the agenda, Keith will provide you with an overview of our operating initiatives for the year ended December 31, 2012 as well as the period subsequent to quarter end. Steve will then conduct a financial review portion of the call, and we will finish with question-and-answer session. 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’s management. These and all statements other than statements of historical fact are forward-looking statements within the 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-K for the year ended December 31, 2012, which we filed this morning and our other filings with the SEC, all of which are incorporated herein by reference. I would now like to turn the call over to Keith Larsen.

Thanks, Reg and good morning, ladies and gentlemen. I would like to begin by stating that 2012 was another active year for the company. We maintained stabilized production of over 1,200 net barrels of oil equivalent per day on average during the year. We demonstrated value through the sale of our undeveloped acreage and reduced our interest in order to keep a conservative debt ratio and to maintain a strong balance sheet. We then purchased interest in developed properties with proven reserves and active development profile and with lower replacement costs than the assets which were sold. We continue to drill and develop our properties in the Williston Basin with a $7.1 million drilling budget for the basin with an additional $20 million budgeted for the acquisition of additional producing properties or to accelerate our Buda drilling program as warranted. We also initiated the first steps in the permitting process at the Mount Emmons moly project by filing a mine plan of operations in October 2012, the first permitting initiative on the project in over 30 years. This crucial first step is the beginning of progression of the project towards development. We will retain the project vital water rights and will initiate the National Environmental Protection Act review upon acceptance and a completeness determination from the U.S. Forest Service. In addition and subsequent to year-end, we have sold our corporate aircraft and related facilities and we are under contract on the Remington Village Project with an anticipated May closing, subject to due diligence. These sales and potential closing reinforce the company's commitment to its shareholders to continue to reduce our operating costs and maintain our focus on the development of our gas programs as well as the advancement of the Mount Emmons project. During the year ended December 31, 2012,…

Thank you, Keith. During the year ended December 31, 2012, we recorded a net loss of $11.2 million after taxes or $0.41 per share as compared to a net loss after taxes of $4.8 million or $0.18 per share for the year ended December 31, 2011. Our 2012 earnings have been negatively impacted by onetime charges. During the year, we recorded approximately $10.5 million in non-cash impairments including the $3 million impairment on Remington Village, a $2.3 million impairment of corporate aircraft and $5.2 million ceiling test write-down on our oil and gas assets. In the financial and operational release that went out earlier today, 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 that it is a valuable tool in measuring operating performance. Earnings before EBITDAX was 413.2 million for the year ending December 31, 2012 which is a 33% increase over EBIDTAX of $9.9 million for the same period of 2011. Similar improvement is reflected in our cash flow from operations which increased by $10.5 million from $2.6 million in 2011 to $13.1 million in 2,012. During the year ended December 31, 2012, our operating revenues increased by $1.5 million to $32.5 million as compared to revenues of $31 million during the year ended December 31, 2011. The increase in operating revenue is primarily due to higher oil sales volumes in 2012 as compared to 2011. Our average realized price for the year ended December 31, 2012 improved to $73.16 per BOE from $69.98 per BOE during 2011. Lease operating expense per BOE including work over cost was $16.42 per BOE…

Thanks, Steve. That concludes our prepared remarks today. Operator, would you please begin the Q&A session?

(Operator Instructions) Our first question is from Jeffrey Connolly of Brean Capital. You may begin.

First question is, how much is the Buda well going to cost? Is that already included in the CapEx budget or is that going to be on top of it?

Not included, Jeff. We plan on moving the $20 million in acquisitions over to that well and subsequent wells if we are successful in it. The total cost we budgeted is $4 million on a gross which would be about $1.3 million net to U.S. Energy.

Okay, and then what do you guys see in the Buda that make you feel more confident than the Eagle Ford?

Actually, we have got four or five locations from Cawley, Gillespie because of the offsetting and what we have seen out there, Jeff, is we have used $4 million gross to drill and complete the well. We have had indications that it might be closer $3.5 million but being conservative we are using $4 million. Some of these wells are having upwards of 300,000 EURs. If that’s the case, this could be some the best economic wells that U.S. Energy has participated in.

Okay, and then what do expect the net proceeds from the apartment sale to be?

$5 million. We have a little less than $10 million note with a commercial bank, First Center State Bank. We will paydown that debt and we will receive about, as I mentioned, $5 million net to us.

Okay, and then do you guys have the net proceeds from the aircraft and the hangar sale?

Actually, we made money on the hangar because it was written down. It was a long-term asset but we did have an impairment on the aircraft but we did receive the $1.9 million in cash.

Okay, thanks a lot. That’s it for me.

Thanks, Jeff.

Thank you. Our next question is from Noel Parks of Ladenburg Thalmann. You may begin.

I heard you just say that you actually got spud locations from your reserve engineers for the Buda. I didn’t appreciate, I guess, the other successful wells really are directly offsetting. Again, how many locations ultimately could you have with the Buda?

Right now, we have 320 acre development. It looks like we have 20 to 30 initial locations there, Noel.

Okay, great. Did you say 20? That sounds like that’s pretty conservative.

I think so too, Noel. It could go down to 160s, but again, we are taking a conservative approach and are awaiting results but we are certainly excited about some of the results that are right next door, if you will.

Great. I just wanted to turn to the Wilcox for a moment. Just if I could get you to refresh my memory, is there a particular number within the Wilcox that you are pursuing?

Well, what we did, of course you might remember, Noel that we were going after the Woodbine. We did encounter a couple of shows in some of the deeper Woodbine and do plan eventually to drill some up dip to those. But on the way down, we had 10 or 12 foot of real good porosity and permeability and we did complete the well. Although it was contaminated because of the deeper drilling and we didn’t have pipe through that formation. So we did have at least encouraging results from the completion of that well. We got a couple barrels of oil and a lot of water. So we are drilling 50 feet up dip to that well. This has got potential for 40, 50, maybe even more locations depending on the extent of the formation and the results of this test.

Okay, great. In the Bakken, are the ASUs that you are seeing across the different operators fairly consistent or are you seeing some variations there?

Well, we are seeing some variations and mainly that’s because of the completion techniques. Of course, most people are aware that Whiting uses a sliding sleeve and 20 stages whereas Statoil uses 35 plus and perf and plug. The perf and plug is more expensive. We are seeing AFEs above the averaging in the $10 million to $11 million on the sliding sleeve, probably closer $8 million dollars. Certainly, we are looking, as I think a lot of people are, at the economics up there. If you get less than 300,000 EURs on $11 million well, it is questionable. In my opinion, you are going to see some slowdown in the Bakken until the prices start to come down.

Thanks a lot. That’s all for me.

Thanks, Noel.

Thank you. Our next question is from Curtis Trimble of Global Hunter. You may begin.

Hoping to get a little bit more data on the Buda and offset, are there volumes or some sort of technical detail that Cawley, Gillespie, at both that locations?

Well, as I mentioned, we have done the internal and Simpson has type curves. I believe we have got six wells offsetting that we believe are within the immediate proximity. Again, it's in that average of 300,000 EURS. So we are pretty excited and the drilling cost are $4 million or less. So if you do the math, the economics are much better than the Eagle Ford or the Bakken, as those numbers come in where we think they are going to come in at and as the other wells indicated that they came in at as well.

Sure. Can you talk about the variability? Maybe in either production rates, 30 day, anything like that? Obviously its just a statistical play, I am just trying to get an idea of any of the variation you might have seen?

I think that the variations I have seen and again I am not a geologist but it is the natural fracturing and that limestone and where you have better fracturing, you are going to have a better well than you do on the lesser well. Although, all six wells that we saw were all economic. So we are encouraged by that but there were some, I think the lowest one that we saw was around 200,000 EURS. So there are still productive, and even at 200,000 EUR, a well at $4 million in still pretty economic.

Right. The 4 million cost differential as opposed to your typical Eagle Ford that’s solely related to the over hole completions as opposed to much more involved multi-frac?

I believe so. I believe that’s the variation.

Good view. I appreciate.

Thanks, Curtis.

Thank you. Our next question is from George Gasper, a private investor. You may begin.

Just a follow-up, Keith, on the Buda and that completion process. Could you explain a little bit about the open hole completion and how far down the well you actually have gear to produce a well like that? I assume you are a working from data that you have acquired from other operators in the field.

My understanding, George, is that it’s a 7,000 foot depth, it’s a 4,000 foot open hole vertical and that there is no simulation. That whatever you get you get. So there is natural pressure down there and there is no fracture stimulation. There is no frac job at all.

Okay, all right. Then one question. You mentioned indicating this morning a completion flow rate on a well in the North Dakota area. Could you relate that again? Then you mentioned something about the circumstances on a well that was heading for the Three Forks but was diverted back to Bakken. Can you explain those things again, please?

Sure, well, I can't give you the technical side. Of course, we just get the daily reports, George. (inaudible) I encountered some formation above or below and decided to go ahead and turn the pipe and completed at the Bakken. I did not call them were for specifics but it looks like the AFE is going to come on in line and we know in that area we have very good performance in the Bakken. So I am not that disappointed. To the second part of your question, did you ask about a specific well or were you just asking about it in general? The flow back rates?

Just in general flow back rates.

In general, George, as you and I discussed before, as a lot of these companies do not open choke flow back their wells like Statoil does, a lot of these companies have a choke and what we are seeing though is a similar performance in the 30, 60, 90 days to the Statoil well. So we think even with the choke back, that the performance and the ultimate EURs are going to be similar for all of these operators. Of course the lower number usually determines a lower EUR ultimately.

Okay, and then one technical question. Tell me, if there is any truth in what I am observing. A few of the well completions that you have had recently up in the Bakken, does it appear that there is a little more gas coming relative to the oil flow rates? Or is that not correct?

Its just kind of a hog spots, George. On some wells, we get more gas and on some wells we get very little gas. So I do not know if you are reading that or hearing it from others, but we are seeing across the board from as little as zero in some wells and as much as a couple million cubic foot a day.

Okay, and then what is going on with the gas. The production, is it still being flared? Are you able to start getting it in the pipelines?

I would say, 85% to 90% of our gas is being put in the pipes. There are handful of wells that they continue to flare. One, notably is our Williston well, located in the town of Williston. There is an issue with the Army Corps of Engineers are boring underneath of a levy to get to the pipeline because we can't. There is so much pressure we can't hook it in to city but other than that most of our wells now are selling gas.

Okay, and one question on Montana. What's the regulation on reviewing information? How long do you have wait before Apache would have to reveal the drilling that they have completed on the wells that are, I think, you indicated 15 miles from acreage that you have interest in?

I don’t know the regulation in Montana, George, but if its similar to the North Dakota, its probably 90 to 180 days

I see, okay. Thank you.

Thanks, George.

Thank you. Our next question is from Evan Richert of Sidoti. You may begin. Evan Richert - Sidoti & Company: Hi, Keith, good to speak with you. Obviously you just out the IP results today and it is pretty early. I was just wondering if you had any commentary on what kind of decline from those rates you would see if it is in line with the other wells you have in the area? Any kind of commentary you can give on that?

I would expect them to be very similar. We now have 66 wells that we participated in and all of them have a similar decline curve. At the end of one year, they are going to be producing 105 to 15% of what the IP is. Some of the choked back wells are going to have very similar numbers, maybe a little bit better than that then the Brigham wells. Maybe they may be as high as 20% of that initial rate at the end of a year. Evan Richert - Sidoti & Company: Okay, and any change in really your strategy for hedging? I know you use the cost of callers but still thinking about it the same way, you are not really, any change in that, really?

What our policy is, is that we, our board has authorized us to go up to 50% of our estimated production. We have covered that for 2013 and currently we are looking at 2014, either the first half or possibly nine months. We almost pulled the trigger when we got up to $97. Kind of sorry that we didn’t. Now we are watching it like everybody does. If we get above $95, we will probably look $90 floor, cost of caller for 2014. Evan Richert - Sidoti & Company: Okay, and then, this is kind of a hard question to answer but if you did get through the Forest Service as far as Mount Emmons is concerned, any idea what the timeline would be for the NEAP review. If there would be any milestones you could expect after, if that process started today what that would entail? Or is that kind of hard to say?

Well, by regulation, I believe the timeframe is about 18 months but being realistic in today's environment in the United States, probably a three to four year time period but the milestones will come with myriad of different permits, air quality permits, hydrology, rock mechanic permits, citing, certainly a host of public meetings to explain it. Its surely will be an effort, lets make no doubt. But what we have done is, we look, once its complete to continue our marketing efforts and bring in, hopefully, a bigger player that has done this before, that has an interest and would like to see a little improvement in the moly price which is currently around $11 per pound. Evan Richert - Sidoti & Company: Okay.

Kept all our options open. There was talk about a land exchange and certainly the other parties or some party comes to us with something meaningful then we are certainly reasonable to those things as well. Evan Richert - Sidoti & Company: Okay, and I think you said that you are getting a net of a roughly $5 million from Remington. Do I have that right?

It will be just a little under $10 million, $9.7 million, I think there. So whatever the net after commission which would be probably $300,000 or so. Evan Richert - Sidoti & Company: Okay, and assuming everything goes straight ahead you get that, any chance of you raising the CapEx budget by that? Or do you already have that built in?

Well, we have to lean on our $20 million line of credit now just to meet that $20 million budget for acquisitions. Evan Richert - Sidoti & Company: So you are not really expecting any kind of deviation from that?

I think what you are going to see is, we are going to wait and see what this Buda well does. We are certainly not putting all of our eggs in one basket but we are very encouraged by that. We talked to Crimson and certainly if we do have the results that we are expecting, although they said they are going to be drilling out of cash flow, they have indicated that they will shift money as well. We will just work with them and this could be a real potential for the company as well as that Wilcox test So don’t look for any immediate acquisitions, although we are still looking. We have probably got three or four on our plate right now that looks interesting, if you will. We are holding our power back to see what happens in those few tests. Evan Richert - Sidoti & Company: Al right. That’s all for me. Thanks.

Got you.

Thank you. Our next question is from Jeffrey Connolly of Brean Capital. You may begin.

Yes, can you give us a little more color on what you are seeing in terms of Bakken asset packages?

Yes, well, we are saying. I think what you are seeing up there. There is smaller packages. We are saying as little as 10 barrels for sale and BOE per day for sale up to as much as over 1,000 BOE. In my opinion, what has happened is something similar that happened to us as the end of 2011 that we were getting AFEs and weren’t getting the checks back quick enough and some of the smaller operators are just putting out additional checks after checks and they can't keep up. So they are really going to have to go non-consent or they have are going to have sell. I think that they are a little bit late. We were fortunate to sell when we did when prices were still pretty good at the end of '11, early 2012. So we are seeing packages and in fact we bought one that we can buy, a producing BOE that’s sustainable for around $50,000. We are buying reserves in the ground for somewhere around $10 and it is certainly costing us much more than that to drill for it and in excess of $20. So we think it makes good economic sense to take advantage of those opportunities.

Okay, and then you can give us some type of indication on what you would want to see at that Buda well, where you declared that it’s a success and then start to put more capital down there.

We are seeing, I think the numbers without having them in front me, 600 barrels to around 1,200 barrels on our initial production. I think if we go that type of rate, it would get both Crimson and us excited.

All right. Thanks.

Thank, Jeff.

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

Yes, I would like thank our audience for joining us today. As mentioned throughout 2012, we have continued to prudently manage our balance sheet and drilling commitments. We have significantly reduced our overhead cost through the sale of non-core assets and we are focused on our development opportunities through acquisitions and the drillbit. We have taken key first steps in advancement of the mine. We will continue to maintain our financial and operational flexibility with the ultimate goal of driving growth and profitability for the company shareholders. We appreciate your support throughout 2012 and look forward to reporting results that we achieve throughout the balance of the year. Thank you very much, everybody.

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