RIVERTON, Wyo., Aug. 8 /PRNewswire-FirstCall/ -- U.S. Energy Corp. (NASDAQ:USEG) announced today that it has paid cash to completely retire the $3 million loan it owed to Geddes and Company. Repayment of the loan brings to $11.2 million the amount of debt retired or converted by USEG since February 2005. "For the past year, we have undertaken an intensive effort to restructure our companies," Keith Larsen, president of USEG said. "Our goal has been to position USEG (and its majority-owned subsidiary Crested Corp. (OTC:CBAG) (BULLETIN BOARD: CBAG) ) to capitalize on the resurgent markets in uranium, vanadium, molybdenum and gold. By any measure, liquidating over $11 million in debt in only eight months will allow us to dedicate capital to our repositioning strategy." USEG repaid the Geddes loan with proceeds from its sale of its coal bed methane subsidiary, Rocky Mountain Gas, Inc. (RMG), to Enterra Energy Trust (Nasdaq: EENC; TSX: ENT.UN), on June 2. After an initial payment of $500,000 at the Enterra closing, the $2.5 million remaining principal and interest had been scheduled for repayment in ten monthly installments beginning in July 2005 and ending in April 2006. However, USEG repaid the entire outstanding balance with interest on Aug. 1, 2005. In the first quarter of 2005, USEG borrowed $4,720,000 in face amount debentures, which included interest at 6%, from a group of seven accredited investors. Five payments of 20% in either cash or USEG restricted common stock were due every six months beginning Aug. 4, 2005. However, prior to the first payment, the investors exercised their option to convert the entire debentures to 1,942,387 shares of USEG restricted common stock. Resale of these shares is covered by a Form S-3 registration statement. The sale of RMG also resulted in the repayment by Enterra of approximately $3,500,000 to Petrobridge Investment Management, a mezzanine credit facility. RMG's wholly owned subsidiary, RMG I, had used the Petrobridge loan to finance a portion of its purchase of Hi-Pro Production, a Gillette, Wyoming coal bed methane company. The Hi-Pro properties, along with RMG's other coal bed methane gas interests, were included in the sale of RMG to Enterra. RMG's equity stake in Pinnacle Gas Resources, Inc. (a private coal bed methane company) was not included in the sale to Enterra; that stake was assigned pro rata to USEG and CBAG. "Our management team has done an excellent job of reducing debt over the past six months, and we are now in a position to take advantage of rising commodity prices," Larsen said. "We have significant properties in gold, uranium, molybdenum and natural gas, all of which are showing strong fundamentals and high prices." ABOUT U.S. ENERGY CORP. AND CRESTED CORP. U.S. Energy Corp. and its majority-owned subsidiary, Crested Corp., are engaged in a joint venture to conduct various business operations as USECC. Through their subsidiaries, Sutter Gold Mining Inc., Plateau Resources Limited., U.S. Moly Corp and USECC, they own interests or properties prospective for gold, uranium, vanadium and molybdenum. This news release includes statements which may constitute "forward- looking" statements, usually containing the words "believe," "estimate," "project," "expect," or similar expressions. These statements are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, future trends in mineral prices, the availability of capital, competitive factors, and other risks. The profitable mining and processing of uranium and vanadium will depend on many factors: Obtaining properties in proximity to the Shootaring mill to keep transportation costs economic; delineation through extensive drilling and sampling of sufficient volumes of mineralized material, with sufficient grades, to make mining and processing economic over time; continued sustained high prices for uranium oxide and vanadium; obtaining the capital required to upgrade the Shootaring mill and add a vanadium circuit; and obtaining and continued compliance with operating permits. The profitable mining and processing of gold will depend on many factors, including receipt of final permits and keeping in compliance with permit conditions; delineation through extensive drilling and sampling of sufficient volumes of mineralized material, with sufficient grades, to make mining and processing economic over time; continued sustained high prices for gold; and obtaining the capital required to initiate and sustain mining operations and build and operate a gold processing mill. We have not yet obtained feasibility studies on any of our mineral properties. These studies would establish the economic viability, or not, of the different properties based on extensive drilling and sampling, the design and costs to build and operate gold and uranium/vanadium mills, the cost of capital, and other factors. Feasibility studies can take many months to complete. We have not established any reserves (economic deposits of mineralized materials) on any of our uranium/vanadium or gold properties, and future studies may indicate that some or all of the properties will not be economic to put into production. The molybdenum property has had extensive work conducted by prior owners, but this data will have to be updated to determine the viability of starting mining operations. Obtaining mining and other permits to begin mining the molybdenum property may be very difficult, and, like any mining operation, capital requirements for a molybdenum mining operation will be substantial. By making these forward-looking statements, the Companies undertake no obligation to update these statements for revision or changes after the date of this release. DATASOURCE: U.S. Energy Corp. CONTACT: Keith G. Larsen, President, or Don Warfield, Director of Corporate Relation, , both of U.S. Energy Corp., +1-307-856-9271

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