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<SEC-DOCUMENT>0001028269-03-000025.txt : 20030310
<SEC-HEADER>0001028269-03-000025.hdr.sgml : 20030310
<ACCEPTANCE-DATETIME>20030310082031
ACCESSION NUMBER:		0001028269-03-000025
CONFORMED SUBMISSION TYPE:	S-3
PUBLIC DOCUMENT COUNT:		7
FILED AS OF DATE:		20030310

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			US ENERGY CORP
		CENTRAL INDEX KEY:			0000101594
		STANDARD INDUSTRIAL CLASSIFICATION:	METAL MINING [1000]
		IRS NUMBER:				830205516
		STATE OF INCORPORATION:			WY
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		S-3
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-103692
		FILM NUMBER:		03597118

	BUSINESS ADDRESS:	
		STREET 1:		877 NORTH 8TH WEST
		STREET 2:		GLEN L LARSEN BLDG
		CITY:			RIVERTON
		STATE:			WY
		ZIP:			82501
		BUSINESS PHONE:		3078569271

	MAIL ADDRESS:	
		STREET 1:		877 NORTH 8TH WEST
		CITY:			RIVERTON
		STATE:			WY
		ZIP:			82501

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	WESTERN STATES MINING INC
		DATE OF NAME CHANGE:	19851229
</SEC-HEADER>
<DOCUMENT>
<TYPE>S-3
<SEQUENCE>1
<FILENAME>s3initial_filing.txt
<DESCRIPTION>FORM S-3, INITIAL FILING 882,460 SHARES
<TEXT>
     As filed with the Securities and Exchange Commission on March 10, 2003

                         Registration No.______________
                       Securities and Exchange Commission
                             Washington, D.C. 20549
                                 ---------------
                                    FORM S-3
                             Registration Statement
                        Under the Securities Act of 1933

                                U.S. ENERGY CORP.
- --------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                                     Wyoming
- --------------------------------------------------------------------------------
         (State or other jurisdiction of incorporation or organization)

                                   83-0205516
- --------------------------------------------------------------------------------
                      (I.R.S. Employer Identification No.)

         877 North 8th West, Riverton, Wyoming 82501; Tel. 307.856.9271
- --------------------------------------------------------------------------------
    (Address, including zip code, and telephone number, including area code,
                    of issuer's principal executive offices)

                      Daniel P. Svilar, 877 North 8th West
                      Riverton, WY 82501; Tel. 307.856.9271
- --------------------------------------------------------------------------------
 (Name, address, including zip code, and telephone number of agent for service)

                      Copies to:   Stephen E. Rounds, Esq.
                                   The Law Office of Stephen E. Rounds
                                   4635 East 18th Ave., Denver, CO 80220
                                   Tel:  303.377.6997; Fax: 303.377.0231
                                    ---------------
Approximate date of commencement and end of proposed sale to the public: From
time to time after the registration statement becomes effective.

If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X ]

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering:[ ] ________

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]


<PAGE>


<TABLE>
<CAPTION>

CALCULATION OF REGISTRATION FEE

                                                                             Proposed
                                                       Proposed               Maximum
                                 Amount of              Maximum              Aggregate
Title of Each Class             Securities             Offering            Dollar Price            Amount
of Securities                to be Registered          Price Per         of Securities to            of
to be Registered              in the Offering          Security            be Registered            Fee
- ----------------              ---------------          --------            -------------         --------

<S>                             <C>                      <C>              <C>                    <C>
Common Stock                       28,192                $4.00            $   112,768.00         $  10.38
                                Shares(1)

Common Stock                      333,333                $3.00            $   999,999.00         $  92.00
                                Shares(2)

Common Stock                      150,000                $3.00            $   450,000.00         $  41.40
                                Shares(3)

Common Stock                        3,000                $3.75            $    11,250.00         $   1.04
                               Shares (4)

Common Stock                       74,564                $3.64            $   271,412.96         $  24.97
                               Shares (5)

Common Stock                      166,666                $3.00            $   499,998.00         $  46.00
                               Shares (6)

Common Stock                       75,000                $3.00            $   225,000.00         $  20.70
                               Shares (7)

Common  Stock                      33,705                $3.11            $   104,822.55         $   9.64
                               Shares (8)

Common Stock                       18,000                $3.00            $    54,000.00         $   4.97
                               Shares (9)

Total No. Securities
to be Registered                  882,460                                 $ 2,729,250.51         $ 251.10
                                   Shares
</TABLE>

(1)  These shares being registered for resale under this registration statement
     are issuable on exercise of outstanding warrants, at $4.00 per share, which
     warrants are held by 36 persons who own equity interests in VentureRound
     Group LLC ("VRG"), exercisable at $4.00 per share. These warrants expire on
     March 25, 2004.

(2)  These shares being registered for resale under this registration statement
     are issuable upon conversion of debt to shares at a rate of 1 share for
     $3.00 of principal payable on a convertible secured promissory note held by
     Caydal, LLC.

(3)  These shares being registered for resale under this registration statement
     are issuable on exercise of outstanding warrants, at $3.00 per share, which
     warrants are held by Caydal, LLC and 31 persons who own equity interests in
     VRG, exercisable at $3.00 per share. These options expire on May 30, 2005.

                                        1

<PAGE>



(4)  These shares being registered for resale under this registration statement
     are issuable on exercise of outstanding warrants, at $3.75 per share, which
     warrants are held by one person who owns an equity interest in VRG,
     exercisable at $3.75 per share. These warrants expire on October 18, 2006.

(5)  These shares being registered for resale under this registration statement
     are issuable on exercise of outstanding warrants, at $3.64 per share, which
     warrants are held by 23 persons. These warrants expire July 19, 2003.

(6)  These shares being registered for resale under this registration statement
     are issuable upon conversion of debt to shares at a rate of 1 share for
     $3.00 of principal payable on a convertible secured promissory note held by
     Tsunami Partners, L.P.

(7)  These shares being registered for resale under this registration statement
     are issuable on exercise of outstanding warrants, at $3.00 per share, which
     warrants are held by Tsunami Partners, L.P. and 34 persons who own equity
     interests in VRG, exercisable at $3.00 per share. These options expire on
     November 19, 2005.

(8)  These shares being registered for resale under this registration statement
     include 20,000 shares held by two trusts, which shares were issued in a
     Sutter Gold Mining Company litigation settlement, and 13,705 shares issued
     as partial payment of legal services.

(9)  These shares being registered for resale under this registration statement
     are issuable on exercise of outstanding options, at $3.00 per share, which
     options were issued as partial payment for legal services. These options
     expire February 2, 2004.

     Pursuant to rule 457(c), registration fee calculations for shares
outstanding are estimated based on the $3.11 market value of the registrant's
common stock (Nasdaq National Market System price on March 6, 2003), which is
within 5 business days prior to the initial filing of this statement.

     Pursuant to Rule 457(h)(1), the maximum proposed offering price for shares
underlying warrants currently outstanding is based on the exercise price of the
warrants.

     The registration fee has been calculated pursuant to Rule 457(h) of the Act
by multiplying the proposed aggregate offering price times the fee rate of
$0.000092.

DELAYING AMENDMENT UNDER RULE 473(A): The registrant hereby amends this
registration statement on such date or dates as may be necessary to delay its
effective date until the registrant shall file a further amendment which
specifically states that this registration statement shall become effective in
accordance with section 8(a) of the Securities Act of 1933 or until the
registration statement shall become effective on such date as the Commission
acting pursuant to section 8(a), may determine.

The information in this prospectus is subject to completion or amendment. The
securities covered by this prospectus cannot be sold until the registration
statement filed with the Securities and Exchange Commission becomes effective.
This prospectus shall not constitute an offer to sell or the solicitation of an
offer to buy nor shall there be any sale of these securities in any state in
which an offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of that state.



                                        2

<PAGE>



                                U.S. ENERGY CORP.
                         882,460 SHARES OF COMMON STOCK

     This prospectus covers the offer and sale of up to 33,705 shares of common
stock ($0.01 par value) by shareholders; and up to 848,755 shares of common
stock by holders of warrants and options on exercise of the warrants and
options, and shares which may be issued if principal on two secured convertible
notes is converted to common shares. The shares are offered for sale by the
selling shareholders; all but one of the selling shareholders will become such
on exercise of their warrants, or if the principal on the secured convertible
notes is converted to common shares, and those persons decide to sell the
shares:

     o    28,192 shares under warrants held by 36 persons who own equity
          interests in VentureRound Group, LLC ("VRG"), exercisable at $4.00 per
          share. The warrants expire on March 25, 2004.

     o    333,333 shares which may be issued if $1,000,000 principal on a
          secured convertible note held by Caydal, LLC is converted to common
          shares at a rate of 1 share for $3.00 of principal.

     o    120,000 shares under warrants held by Caydal, LLC, exercisable at
          $3.00 per share. These warrants expire on May 30, 2005

     o    30,000 shares under warrants held by 31 persons who own equity
          interests in VRG, exercisable at $3.00 per share. These warrants
          expire on May 30, 2005.

     o    3,000 shares under warrants held by one person associated (licensed)
          with (and who owns an equity interest in VRG), exercisable at $3.75
          per share. These warrants expire on October 18, 2006.

     o    74,564 shares under warrants held by 23 persons who had been
          associated (licensed) with a broker-dealer which raised funds for
          Yellowstone Fuels Corp., a subsidiary of the company, under a private
          placement of YSFC common stock in 1997. The YSFC warrants were
          exchanged for warrants of the company in 1999. The warrants expire
          July 19, 2003.

     o    166,666 shares which may be issued if $500,000 principal on a secured
          convertible note held by Tsunami Partners, L.P. is converted to common
          shares at a rate of 1 share for $3.00 of principal.

     o    60,000 shares under warrants held by Tsunami Partners, L.P.,
          exercisable at $3.00 per share. These warrants expire November 19,
          2005.

     o    15,000 shares under warrants held by persons who own equity interests
          in VRG, exercisable at $3.00 per share. These warrants expire November
          19, 2005.

     o    20,000 shares held by two trusts, which shares were issued to them in
          settlement of a lawsuit involving the company's subsidiary Sutter Gold
          Mining Company.

     o    13,705 shares held by two persons, which shares were issued as partial
          payment for legal services.

                                        3

<PAGE>



     o    18,000 shares under options held by one person, which options were
          issued as partial payment for legal services, exercisable at $3.00 per
          share. These options expire February 2, 2004.

     On May 30, 2002, we borrowed $1,000,000 from Caydal, LLC, a private lender
and shareholder of U.S. Energy Corp. The two year secured loan is convertible
into restricted shares of U.S. Energy Corp. common stock at the rate of 1 share
for $3.00 of principal (a maximum of 333,333 shares), or into restricted shares
of common stock of our subsidiary Rocky Mountain Gas, Inc. at the rate of 1
share for $1.50 of principal. In addition, USE issued to the lender a warrant to
purchase until May 30, 2005, 120,000 shares of USE restricted common stock, at
$3.00 per share, and RMG issued to the lender a warrant to purchase until May
30, 2005, 120,000 shares of RMG restricted common stock, at $1.50 per share.
VentureRound Group ("VRG"), a licensed broker-dealer, acted as the lender's
agent in the transaction, for which services USE paid VRG $25,000 cash and
issued (to 31 persons who own equity interests in VRG) warrants to purchase
until May 30, 2005, 30,000 restricted shares of common stock of U.S. Energy
Corp., at $3.00 per share. Resale of the shares of U.S. Energy Corp. common
stock issuable to the lender on conversion of the note, and the shares issuable
on exercise of the warrants to purchase shares of common stock of U.S. Energy
Corp. issued to the lender, and to the 31 persons who own equity interests in
VRG, are covered by this resale prospectus.

     VRG also served as financial advisor to the company in connection with a
private financing by the company in February and March 2002. In connection with
that transaction, warrants to purchase 28,192 shares at $4.00 are held by 36
persons who own equity interests in VRG, issued as of March 25, 2002, expiring
on March 25, 2004. In connection with an earlier financing by the company, the
company issued warrants to purchase 3,000 shares at $3.75 to one person who owns
an equity interest in and is associated (licensed) with VRG; these warrants were
issued as of October 18, 2001 and expire on October 18, 2006. Resale of shares
acquired on exercise of all these warrants is covered by this resale prospectus.

     On November 19, 2002, we borrowed $500,000 from Tsunami Partners, L.P., a
private lender. The two year secured loan is convertible into restricted shares
of U.S. Energy Corp. common stock at the rate of 1 share for $3.00 of principal,
or into restricted shares of common stock of our subsidiary Rocky Mountain Gas,
Inc. at the rate of 1 share for $2.00 of principal. In addition, U.S. Energy
Corp. issued to the lender a warrant to purchase until November 19, 2005, 60,000
shares of U.S. Energy Corp. restricted common stock, at $3.00 per share (a
maximum of 166,166 shares), and RMG issued to the lender a warrant to purchase
until November 19, 2005, 60,000 shares of RMG restricted common stock, at $2.00
per share. VRG acted as the agent in the transaction, for which services USE
paid VRG $20,000 cash and issued a warrant to purchase until November 19, 2005,
15,000 restricted shares of common stock of U.S. Energy Corp., at $3.00 per
share. These warrants were issued to the equity owners of VRG (see below),
including Robert H. Taggart, a licensed broker who provided
securities-transaction services. Resale of the shares of U.S. Energy Corp.
common stock issuable to the lender on conversion of the note, and the shares
issuable on exercise of the warrants to purchase shares of common stock of U.S.
Energy Corp. issued to the lender, and to the equity owners of VRG, are covered
by this resale prospectus.

     In each of the financing or advisory transactions in which VRG was
involved, the services provided by VRG were provided by persons associated with
(licensed with) a broker-dealer registered with the Securities and Exchange
Commission. The warrants to purchase stock in USE were issued in partial
consideration for these services provided by licensed persons, but distributed
to the owners of VRG, including the persons licensed as brokers (who also own
equity interests in VRG). Those persons who received warrants as owners of VRG,
but who are not licensed as brokers, did not provide securities- transaction
services and did not otherwise pay for the warrants.


                                        4

<PAGE>



     Effective September 19, 2002, we entered into amendments to warrants that
were to expire on that date. The original warrants were issued for the exercise
of up to 67,025 shares of the company's common stock to persons who had been
associated (licensed) with a broker-dealer which raised funds in 1997 for
Yellowstone Fuels Corp., a subsidiary of the company. As consideration for an
extension of time for exercising the warrants, the holders agreed to waive
certain rights relating to anti-dilutive and cashless exercise provisions of the
original warrants. The warrants, which cover now 74,564 shares, are exercisable
at $3.64 per share, and now expire on July 19, 2003. Resale of these 74,564
shares is covered by this prospectus.

     On December 2, 2002, the company and its subsidiary Sutter Gold Mining
Company entered into a settlement agreement relating to certain litigation
involving SGMC. As a result of the settlement the company issued 20,000 shares
of U.S. Energy Corp. common stock to trusts. Resale of these 20,000 shares is
covered by this prospectus.

     On February 3, 2003, the company issued 8,231 shares and 5,474 shares of
common stock, respectively, to two persons, and options to purchase 18,000
shares of common stock to one of them as partial payment for legal services.
Resale of these 13,705 shares is covered by this prospectus.

     In this prospectus, "selling shareholder" or "selling shareholders" refers
to Caydal, LLC, 36 persons who own equity interests in VRG, 22 persons who had
been associated (licensed) with a broker- dealer which raised funds for YSFC,
Tsunami Partners, L.P, two trusts involved in the SGMC litigation settlement,
and the two persons who performed legal services for the company. In this
prospectus, and the information incorporated by reference, "we," "company," and
"USE" refer to U.S. Energy Corp. (and its subsidiaries unless otherwise
specifically stated).

     The selling shareholders may sell the shares from time to time in
negotiated transactions, brokers' transactions or a combination of such methods
of sale at market prices prevailing at the time of sale or at negotiated prices.
Although we will receive proceeds if and to the extent the options and warrants
are exercised, we will not receive any proceeds from sale of any of the shares
offered by the selling shareholders. None of the options or warrants have been
exercised at prospectus date.

     USE is traded ("USEG") on the Nasdaq National Market System ($3.11 on March
6, 2003).

     AN INVESTMENT IN THE SHARES OFFERED BY THIS PROSPECTUS IS SPECULATIVE AND
SUBJECT TO RISK OF LOSS. SEE "RISK FACTORS" BEGINNING ON PAGE 11 AND THE TABLE
OF CONTENTS ON PAGE 6.

     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.


             THE DATE OF THIS PROSPECTUS IS _________________, 2003.

                                        5

<PAGE>



                                TABLE OF CONTENTS
                                                                        PAGE NO.

Summary Information............................................................8

         The Company...........................................................8

         The Offering..........................................................9

Risk Factors .................................................................11

     Risk Factors Involving the Company.......................................11

         Lack of coalbed methane production
          and established reserves for most of the
         coalbed methane properties may slow down
         future exploration of these properties...............................11

         Continued low gas prices for Powder River
         Basin production may hurt our business...............................12

         We may have to begin to curtail
         operations if we don't raise
         more capital by July 2003............................................12

         We are subject to certain kinds of risks
         which are unique to the minerals business............................13

         Delays in obtaining permits for methane
         wells could impair our business......................................13

         The company's poison pill could discourage
         some advantageous transactions.......................................13

         Compliance with environmental
         regulations may be costly............................................13

         Commodity price fluctuations may be
         difficult to manage and could cause losses...........................14

         Future equity transactions, including exercise of
         options or warrants, could result in dilution........................14

         Terms of  subsequent financings may
         adversely impact your investment.....................................14

         There may be risks related to our prior use of
         Arthur Andersen LLP as our independent
         certified public accountant..........................................15

     Risk Factor Involving This Offering......................................15

                                        6

<PAGE>



Representations About This Offering...........................................16

Forward Looking Statements....................................................16

Description of Securities.....................................................16

Use of Proceeds...............................................................20

Selling Shareholders..........................................................20

Plan of Distribution..........................................................28

Disclosure of Commission Position on Indemnification..........................29

Where to Find More Information About Us.......................................30

Incorporation of Certain Information by Reference.............................30

Legal Matters.................................................................31

Experts.......................................................................31


                                        7

<PAGE>



                               SUMMARY INFORMATION

     The following summarizes all material information found elsewhere in this
prospectus and the information incorporated into it by reference. This summary
is qualified by the more detailed information in this prospectus and the
information incorporated by reference.

THE COMPANY

     U.S. Energy Corp. is a Wyoming corporation, formed in 1966, in the business
of acquiring, exploring, developing and/or selling or leasing mineral
properties, and the mining and marketing of minerals. We now are engaged in the
exploration of coalbed methane gas properties, which is our primary business
focus. The only activities of a significant and recurring nature are in coalbed
methane.

     We also hold mining properties, but these properties (uranium and a
property in Sutter Creek, California we bought for gold exploration) are shut
down. The most significant uranium properties are located on Sheep Mountain in
Wyoming, and in southeast Utah. We also hold a royalty interest in claims on
Green Mountain, Wyoming, now held by Kennecott Uranium Company (see below).
Interests are held in other mineral properties (principally molybdenum), but are
either non-operating interests or undeveloped claims. We know of no plans for
the molybdenum property to be put into production (this property is owned by
Phelps Dodge). Small oil and gas operations in Montana and Wyoming are conducted
as well. We also hold commercial properties, most of which are located in Utah
and leased to third parties. Our fiscal year ended May 31, but on December 16,
2002, our Board of Directors adopted a resolution changing the fiscal year end
of USE and its affiliates to December 31, effective December 31, 2002.

     The exploration of coalbed methane properties is conducted through Rocky
Mountain Gas, Inc. RMG, a Wyoming corporation is owned 51.1% by USE and 40.4% by
Crested Corp. Crested is a 70.5% majority-owned subsidiary of the company (see
below). Properties of RMG are held in southeastern Montana and northeastern and
southwestern Wyoming. In April 2002, a lawsuit was filed challenging the
validity of Bureau of Land Management leases in Montana. Approximately 32%
(88,411 acres) of RMG's total acreage is leased from the BLM in Montana. See
Item 3 (Legal Proceedings) in the Form 10-K/A for fiscal 2002. The status of
this litigation will be updated in subsequent SEC filings.

     Except for the Bobcat Field (for which we have established gas reserves) we
don't know if anything of value will result from our activities in the coalbed
methane area: Only a limited number of exploratory wells have been drilled, and
there is not yet enough information from these wells to determine if they
contain proved reserves; gas prices are low in the Powder River Basin (our area
of activity); permitting issues may delay further work, and more funding may be
needed but not available.

     USE and Crested originally were independent companies, with two common
affiliates (John L. Larsen and Max T. Evans, Mr. Evans is now deceased). In
1980, USE and Crested formed a joint venture, referred to as the USECC Joint
Venture, to do business together (unless one or the other elected not to pursue
an individual project). As a result of USE funding certain of Crested's
obligations from time to time (due to Crested's lack of cash on hand), and later
payment of debts by Crested issuing common stock to USE, Crested became a
majority-owned subsidiary of USE in fiscal 1993. In fiscal 2001, Crested issued
another 6,666,666 shares of common stock to reduce Crested's debt owed to USE by
$3.0 million, which increased USE's ownership of Crested to 70.5%.

     All of USE's and Crested's operations are in the United States. Principal
executive offices for USE and Crested are located in the Glen L. Larsen building
at 877 North 8th Street West, Riverton, Wyoming 82501, telephone 307.856.9271;
fax 307.857.3050.

                                        8

<PAGE>



     Most of the company's (USE's) operations are conducted through
subsidiaries, the USECC joint venture with Crested, and various jointly-owned
subsidiaries of USE and Crested.

     Until September 11, 2000, USE, Crested and Kennecott Uranium Company
("Kennecott"), owned the Green Mountain Mining Venture ("GMMV"), which held a
large uranium deposit and uranium mill in Wyoming. On September 11, 2000, USE
and Crested settled litigation with Kennecott involving the GMMV by selling
their interest in the GMMV and its properties back to Kennecott for $3.25
million and receiving a royalty interest in the uranium properties. Kennecott
also assumed all reclamation obligations on the GMMV properties. Other principal
uranium properties and an uranium mill in southeast Utah are held by Plateau
Resources Ltd., a wholly-owned subsidiary of USE. The Utah uranium properties
are shut down.

     The property held by Sutter Gold Mining Company ("SGMC"), a majority-owned
subsidiary of USE, is shut down so far as a prospective mining operation is
concerned, because the current price of gold is too low to raise the capital
necessary to put the properties into production. There are no current plans to
start mining activities at Sutter.

THE OFFERING

Securities Outstanding            12,189,776 shares of common stock, $0.01 par
                                  value.

Securities To Be Outstanding      13,038,531 shares of common stock, $0.01 par
                                  value, assuming the options and warrants on
                                  348,756 shares held by the selling
                                  shareholders were exercised as of the date of
                                  this prospectus, and the principal payments of
                                  the two secured convertible notes is converted
                                  to 499,999 common shares as of the date of
                                  this prospectus.

Securities Offered                882,460 shares of common stock owned or to be
                                  owned by the selling shareholders.

Use of Proceeds                   We will not receive any proceeds from sale of
                                  shares by the selling shareholders, but we
                                  will receive up to $1,124,431 in proceeds from
                                  exercise of the warrants and options, if they
                                  are exercised, which will be used by the
                                  company for working capital.

Plan of Distribution              The offering is made by the selling
                                  shareholders named in this prospectus, to the
                                  extent they sell shares. Sales may be made in
                                  the open market or in private negotiated
                                  transactions, at fixed or negotiated prices.
                                  See "Plan of Distribution."

Risk Factors                      An investment is subject to risk. See "Risk
                                  Factors."


                                        9

<PAGE>



GAS RESERVES FOR BOBCAT FIELD

     The following table sets forth estimated proved reserves of gas and the
present value (discounted 10%, referred to as the "PV10") of such reserves as of
December 31, 2002. These reserves are for the Bobcat Field (24 wells, all
producing from the Cook coal, and wells to be drilled to the Cook coal, on
acreage adjacent to the producing wells). The reserve data and the present value
as of that date were prepared by Ryder Scott Company, independent petroleum
engineers. For further information, see Ryder Scott's reserve report included as
an exhibit to registration statement covering this prospectus.

     Refer to these definitions when reading the reserve information:

     PROVED RESERVES: The estimated quantities of gas that geological and
engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions.

     PROVED DEVELOPED RESERVES: Proved reserves that can be expected to be
recovered from existing wells with existing equipment and operating methods.

     PROVED UNDEVELOPED RESERVES: Proved reserves that are expected to be
recovered from new wells on undrilled acreage.

     PRESENT VALUE (also referred to below as the "PV10 VALUE"): The present
value of estimated future revenues to be generated from the production of proved
reserves, net of estimated production and future development costs, using prices
and costs as of the calculation date without future escalation, all without
giving effect to non-property related expenses (such as general and
administrative expenses, debt service, or future income tax expense), or to
depreciation, depletion and amortization, and discounted using an annual
discount rate of 10%.

     The PV10 value was prepared using constant prices ($3.00 per Mcf) as of the
calculation date, discounted at 10% per annum on a pre-income tax basis, and is
not intended to represent the current market value of the estimated gas reserves
owned by the company. Note that the PV10 discount factor has been calculated net
of ad valorem and production taxes, but before income taxes. The PV10 discount
factor is not the same as the standardized measure of present value calculations
which are determined on an after-income tax basis.

                               Proved Reserves     Proved Reserves
                                  Developed          Undeveloped        Total
                                  ---------          -----------        -----

Coalbed methane gas (Mmcf)            489.7              95.9            585.6
PV10 Value                        $ 793,482          $ 94,947         $ 888,429

     These estimates of proved reserves have been filed only with the Securities
and Exchange Commission, and have not been included in reports to other federal
agencies.

     Note that there are numerous uncertainties inherent in estimating gas
reserves and their estimated values, including many factors beyond the control
of the company. Reservoir engineering is a subjective process of estimating
underground accumulations of gas that cannot be measured exactly. Estimates of
economically recoverable gas, and the future net cash flows which may be
realized from the reserves, necessarily depend on a number of variable factors
and assumptions, such as historical production from the area compared with
production from other areas, the assumed effects of regulations by government

                                       10

<PAGE>



agencies, assumptions about future gas prices and operating costs, severance and
excise taxes, development costs, and workover and remedial costs. The outcomes
in fact may vary considerable from the assumptions.

     Estimates of the economically recoverable quantities of gas attributable to
any particular property, the classification of reserves as to proved developed
and proved undeveloped based on risk of recovery, and estimates of the future
net cash flows expected from the properties, as prepared by different engineers
or by the same engineers but at different times, may vary substantially, and the
estimates may be revised up or down as assumptions change.

     It is likely that actual production volumes, revenues from production, and
the amount of money spent on a property's reserves, will vary from the
estimates. These variances could be material.

     The PV10 discount factor, which is required by Securities and Exchange
Commission for use in calculating discounted future net cash flows for reporting
purposes, is not necessarily the most appropriate discount factor, based on
interest rates in effect in the financial markets, and risks associated with the
gas business.

     Generally, the volume of gas production declines as reserves are depleted,
with the rate of decline depending on reservoir characteristics. Except to the
extent we conduct successful exploration and development activities on our other
properties, or acquire properties with proved reserves, or both, our proved
reserves will decline with production. Therefore, our future production depends
on finding or acquiring more reserves.

     The business of exploring for, developing, or acquiring reserves is capital
intensive. To the extent operating cash flow is reduced and external capital
becomes unavailable or limited, our ability to make the necessary capital
investment to maintain or expand our gas reserves asset base would be impaired.
There is no assurance future exploration, development, and acquisition
activities will result in additional proved reserves. Even if revenues increase
because of higher gas prices, increased exploration and development costs could
neutralize the increased revenues.

                                  RISK FACTORS

     An investment in our common stock is speculative in nature and involves a
high degree of risk. You should carefully consider the following risks and the
other information in this prospectus (including the information incorporated by
reference) before investing.

RISK FACTORS INVOLVING THE COMPANY

     LACK OF COALBED METHANE PRODUCTION AND ESTABLISHED RESERVES FOR MOST OF THE
COALBED METHANE PROPERTIES MAY SLOW DOWN FURTHER EXPLORATION OF THESE
PROPERTIES. Presently we have only one property in production for which reserves
have been established (see "Gas Reserves for bobcat Field" above). We have not
drilled and tested enough wells on the other properties to determine if we have
economic reserves of coalbed methane in place. For some properties, we will have
to establish at least some reserve parameters before gas transmission companies
will build gas lines to our properties, and construction of lines will depend
also on then-current and projected market prices for gas. If we have the
necessary capital, we may elect to build our own lines over to existing
transmission lines near two of our properties in the Powder River Basin in
Wyoming. We can't sell production until the lines and associated gathering lines
and compression stations are constructed.


                                       11

<PAGE>



     Due to permitting delays in Montana, we may not realize production from the
Castle Rock and Kirby prospects until late 2003, or later. The Bobcat property
in Wyoming is now in production, and other Wyoming properties could be in
production in 2003, but production might be delayed due to low market prices for
gas. Low market prices could delay gas purchasers from building the necessary
lines to move gas from our properties to the major gas transmission lines.

     These factors may make it difficult to raise the amount of capital needed
to further explore the coalbed methane production potential in our properties in
a rapid manner. Therefore, we may have to seek to raise capital. In the
meantime, we have only limited working capital. See below.

     CONTINUED LOW GAS PRICES FOR POWDER RIVER BASIN PRODUCTION MAY HURT OUR
BUSINESS. For September, 2002, RMG received an average price of $0.94 per
Million BTU (MMBtu) of gas produced from the Bobcat field (its only producing
field), with prices ranging from $0.46 to $1.22 per MMBtu. The energy content of
our CBM is close to one MMBtu per Mcf (from .96 to .98 MMBtu in 1.00 Mcf). The
Bobcat field is not economic at these low prices. These prices approximate what
other producers in the area were receiving in September 2002, and represent a
negative price differential of approximately 73% compared to the average price
of approximately $3.485 per MMBtu received by producers nationwide. This
negative differential usually narrows to within 60% to 30% of a national average
during the winter months. RMG owns a 27.6% working interest (22% net revenue
interest) in the Bobcat project.

     There is no guarantee that increased pipeline capacity planned or under
construction will eliminate the negative price differential or even
significantly reduce it.

     Produced and sold gas (net of gas used as fuel for the compressors)
averaged approximately 1,821 MMBtu per day in January 2003 (503 MMBtu net rate
to our 27.6% working interest). All gas was sold at market prices (average price
$3.03 per MMBtu), which for January 2003 represented a negative differential of
57% from national average gas prices in that month.

     During March 2003, RMG will receive a guaranteed price of $3.49 per MMBtu
for its share of the first 500 MMBtu of gas sold each day with the balance at
market prices.

     During February 2003, RMG received a guaranteed price of $3.07 per MMBtu
for its share of the first 1,000 MMBtu of gas sold each day, and an average
price of $4.25 per MMBtu for the balance of gas produced. This guaranteed
pricing arrangement may be available to RMG monthly, at prices negotiated with
the gas buyer at the end of each preceding month, or, RMG may elect to sell on
daily market prices.

     The guaranteed pricing mechanism may, or may not, prove advantageous to RMG
in those months it is utilized, depending on market price performance during
those months, and in any event, would not insulate RMG from the negative price
differential to the extent it is a significant influence on prices.

     The return of sustained low gas prices would impair our ability to raise
capital for RMG and reduce revenues from production coming on line. See the
discussion under the caption "Gathering and Transmission of CBM Gas" in the Form
10-K/A for fiscal 2002.

     WE MAY HAVE TO BEGIN TO CURTAIL OPERATIONS IF WE DON'T RAISE MORE CAPITAL
BY JULY 2003. At November 30, 2002, U.S. Energy Corp. had working capital of
$2,166,600, and an accumulated deficit of $36,954,100. Our current level of
operations, including general and administrative overhead, mineral operations
(primarily holding costs for the uranium and gold properties), and costs to
comply with other property lease and permitting obligations for the coalbed
properties, are estimated to cost $2,900,000 for the six months ending June 30,
2003. However, if we can't realize cash from liquidating assets, or other

                                       12

<PAGE>



sources, or if RMG spends more money on exploration than will be covered by
current arrangements, then under these circumstances additional equity financing
may be necessary to sustain operations starting in July 2003. There are no
current commitments for such future financing as may be necessary.

     Our strategy for RMG contemplates a total capital budget of up to
$50,000,000 through calendar 2003 to continue exploring our coalbed methane
properties; put them into production, and to acquire more properties. The cash
requirements for our coalbed methane business are in addition to working capital
requirements. However, lack of production and established reserves may make it
difficult to raise this amount of money in the near future. Therefore, we may
have to seek to raise capital in smaller amounts over time, which efforts
probably will extend well into calendar 2004. See the preceding risk factor.

     WE ARE SUBJECT TO CERTAIN KINDS OF RISK WHICH ARE UNIQUE TO THE MINERALS
BUSINESS. The exploration for and production of minerals is highly speculative
and involves risks different from and in some instances greater than risks
encountered by companies in other industries. Many exploration programs do not
result in the discovery of mineralization and any mineralization discovered may
not be of sufficient quantity or quality. Also, the mere discovery of promising
mineralization may not warrant production, because the minerals (including
methane gas) may be difficult or impossible to extract (produce) on a profitable
basis.

     Profitability of any mining and production we may conduct will involve a
number of factors, including, but not limited to: the ability to obtain all
required permits; costs of bringing the property into production; the
construction of adequate production facilities; the availability and costs of
financing; keeping ongoing costs of production at economic levels, and market
prices for the metals or hydrocarbons to be produced staying above production
costs. Our properties, or properties we might acquire in the future, may not
contain deposits of minerals or coalbed methane gas that will be profitable to
produce.

     In addition, all forms of mineral (and oil and gas and coalbed methane)
exploration and production require permits to have been issued by various
federal and state agencies. See below.

     DELAYS IN OBTAINING PERMITS FOR METHANE WELLS COULD IMPAIR OUR BUSINESS.
Drilling and producing coalbed methane wells requires obtaining permits from
various governmental agencies. The ease of obtaining the necessary permits
depends on the type of mineral ownership and the state in which the property is
located. Intermittent delays in the permitting process can reasonably be
expected throughout the development of any play. For example, there is currently
a temporary moratorium for drilling coalbed methane wells on fee and state lands
in Montana. We may shift our exploration and development strategy as needed to
accommodate the permitting process. As with all governmental permit processes,
permits may not be issued in a timely fashion or in a form consistent with our
plan of operations.

     THE COMPANY'S POISON PILL COULD DISCOURAGE SOME ADVANTAGEOUS TRANSACTIONS.
We have adopted a shareholder rights plan, also known as a poison pill (see
"Description of Securities"). The plan is designed to discourage a takeover of
the company at an unfair low price. However, it is possible that the board of
directors and the takeover acquiror would not agree on a higher price, in which
case the takeover might be abandoned, even though the takeover price was at a
significant premium to market prices. Therefore, as a result of the mere
existence of the plan, shareholders would not receive the premium price.

     COMPLIANCE WITH ENVIRONMENTAL REGULATIONS MAY BE COSTLY. Our business
(mostly coalbed methane) is intensely regulated by government agencies. Permits
are required to drill and pump methane wells, explore for minerals, operate
mines, build and operate processing plants, and handle and store

                                       13

<PAGE>



waste. The regulations under which permits are issued change from time to time
to reflect changes in public policy or scientific understanding of issues. If
the economics of a project would not justify the changes, we might have to
abandon the project.

     The company must comply with numerous environmental regulations on a
continuous basis, to comply with the United States Clean Air Act, the Clean
Water Act, the Resource Conservation and Recovery Act ("RCRA"), and the
Comprehensive Environmental Response Compensation Liability Act ("CERCLA"). For
example, water and dust discharged from mines and tailings from prior mining or
milling operations must be monitored and contained and reports filed with
federal, state and county regulatory authorities. Additional monitoring and
reporting is required by the United States Nuclear Regulatory Commission for
uranium mills even if not currently operating (like the company's uranium mill
at Ticaboo, Utah). The Abandoned Mine Reclamation Act in Wyoming and similar
laws in other states where we have properties impose reclamation obligations on
abandoned mining properties, in addition to or in conjunction with federal
statutes.

     Failure to comply with these regulations could result in substantial fines
and environmental remediation orders. For information on the company's bonding
requirements to date, see note K to the audited financial statements in the 2002
Form 10-K/A.

     COMMODITY PRICE FLUCTUATIONS MAY BE DIFFICULT TO MANAGE AND COULD CAUSE
LOSSES. Gas, gold and uranium prices can be volatile. Sharp swings in market
prices make budgeting and operations more difficult. Sustained lower prices can
result in impairment of the financial value of the mineral property purchased as
well as the facilities built to process the material (such as mills or gas
compression stations). Hedging activities, if available for the commodity, can
protect against price swings but may result in locking a company into a lower
than market price over time.

     FUTURE EQUITY TRANSACTIONS, INCLUDING EXERCISE OF OPTIONS OR WARRANTS,
COULD RESULT IN DILUTION. From time to time the company sells restricted stock
and warrants, and convertible debt, to investors in private placements conducted
by broker-dealers, or in negotiated transactions. Because the stock is
restricted, the stock is sold at a greater discount to market prices compared to
a public stock offering, and the exercise price of the warrants sometimes is at
or even lower than market prices. These transactions cause dilution to existing
shareholders. Also, from time to time, options are issued to employees and third
parties, with exercise prices equal to market. Exercise of in-the-money options
and warrants will result in dilution to existing shareholders; the amount of
dilution will depend on the spread between market and exercise price, and the
number of shares involved. The company will continue to grant options to
employees with exercise prices equal to market price at grant date, and in the
future may sell restricted stock and warrants, all of which may result in
dilution to existing shareholders. See also "Registration for Resale of
Additional Shares May Depress Market Prices."

     TERMS OF SUBSEQUENT FINANCINGS MAY ADVERSELY IMPACT YOUR INVESTMENT. We may
have to raise equity, debt or preferred stock financing in the future. Your
rights and the value of your investment in the common stock could be reduced.
For example, if we have to issue secured debt securities, the holders of the
debt would have a claim to our assets that would be prior to the rights of
stockholders until the debt is paid. Interest on these debt securities would
increase costs and negatively impact operating results. Preferred stock could be
issued in series from time to time with such designations, rights, preferences,
and limitations as needed to raise capital. The terms of preferred stock could
be more advantageous to those investors than to the holders of common stock. In
addition, if we need to raise more equity capital from sale of common stock,
institutional or other investors may negotiate terms at least and possibly more
favorable than the terms of this offering. Shares of common stock which we sell

                                       14

<PAGE>



could be sold into the market, which could adversely affect market price. See
"Risk Factor Involving This Offering" below.

     THERE MAY BE RISKS RELATED TO OUR PRIOR USE OF ARTHUR ANDERSEN LLP AS OUR
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT. The consolidated balance sheet of U.S.
Energy Corp. for the year ended May 31, 2000 and the related consolidated
statements of operations, shareholders equity and cash flows for each of the two
years in the period ended May 31, 2000 included in the Annual Report on Form
10-K/A for the year ended May 31, 2002, as amended and incorporated by reference
into this prospectus, to the extent and for the periods indicated in their
report, have been audited by Arthur Andersen LLP, independent certified public
accountants.

     The recent obstruction of justice conviction of Arthur Andersen LLP may
adversely affect Arthur Andersen LLP's ability to satisfy any claims arising
from the provision of auditing services to us, including claims that may arise
out of Arthur Andersen LLP's audit of our financial statements incorporated by
reference in this prospectus for the years ended May 31, 2000. Arthur Andersen
LLP has been convicted of federal obstruction of justice arising from the
government's investigation of Enron Corp. Should we seek to access the public
capital markets to raise money for the Company before October 1, 2003, SEC rules
will require us to include or incorporate by reference in any prospectus audited
financial statements for the fiscal year ended May 31, 2000, which has been
audited by Arthur Andersen LLP. If the SEC ceases accepting financial statements
audited by Arthur Andersen LLP, we could be unable to access the public capital
markets until after October 1, 2003, unless Grant Thornton LLP, our current
independent accounting firm, or another independent accounting firm, is able to
re-audit the financial statements originally audited by Arthur Andersen LLP. Any
delay or inability to access the public capital markets caused by these
circumstances could have a material adverse effect on our business,
profitability, and growth prospectus.

     The SEC's rules would not require the use of the financial statements for
the fiscal year ended May 31, 2000, in any prospectus we file after October 1,
2003.

RISK FACTOR INVOLVING THIS OFFERING

     REGISTRATION FOR RESALE OF ADDITIONAL SHARES MAY DEPRESS MARKET PRICES.
From time to time we have funded operations by selling restricted securities of
subsidiary companies for their operations, then later reacquired those
securities by exchange for shares and warrants of USE. For example, in January
2002, we issued 1,423,460 restricted shares of common stock in exchange for
restricted shares of Rocky Mountain Gas, Inc. and in conversion of preferred
stock of USE, for which the exchanging shareholders, and the holder of the USE
preferred stock, originally had invested $5,309,000. The shares of common stock
of USE were issued based on the market price of $3.92 per share on December 5,
2001, and the original investment amount for RMG and preferred stock, plus
$270,959 of interest owed three of the investors.

     In addition, in February and March 2002, we sold 266,541 shares of
restricted stock, at $3.25 per share, and two year warrants to purchase 56,383
shares of stock, with an exercise price of $4.00 per share, for $866,258 cash.
We also issued 20,000 shares to Robert H. Taggart, Jr. in exchange for
unexercised warrants and for services.

     It is anticipated that resale of these 1,710,001 shares of USE common
stock, and resale of the 56,383 shares on exercise of the warrants (at $4.00 per
share), into the public market will be registered on two Form S-3 registration
statements to be filed with the Securities and Exchange Commission in March
2003.

                                       15

<PAGE>



     Such resales could adversely affect market prices for the investors who buy
shares in this offering.

     From time to time, we may sell restricted shares to raise capital.
Registration for resale of such additional shares could adversely affect market
prices for investors who buy shares in this offering.

                       REPRESENTATIONS ABOUT THIS OFFERING

     We have not authorized anyone to provide you with information different
from that contained in this prospectus. This prospectus is not an offer to sell
nor does it seek an offer to buy the shares in any jurisdiction where this offer
or sale is not permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus (or any supplement), regardless
of when it is delivered or when any shares are sold.

                           FORWARD LOOKING STATEMENTS

     We make statements in this prospectus which are considered to be "forward
looking" statements. All statements (other than statements of historical fact)
about financial and business strategy and the performance objectives of
management are forward-looking statements. These forward-looking statements are
based on the beliefs of management, as well as assumptions made by and
information currently available to them. These statements involve risks that are
both known and unknown, including unexpected economic and market factors,
failure to accurately forecast operating and capital expenditures and capital
needs (due to rising costs and/or different drilling and production conditions
in the field), changes in timing or conditions for getting regulatory approvals
to drill coalbed methane wells where needed, and other business factors. The use
of the words "anticipate," "believe," "estimate," "expect," "may," "will,"
"should," "continue," "intend" and similar words or phrases, are intended by us
to identify forward-looking statements (also known as "cautionary statements"
because you should be cautious in evaluating such statements in the context of
all the information in this prospectus and the information incorporated by
reference into this prospectus). These statements reflect our current views with
respect to future events. They are subject to the realization in fact of
assumptions, but what we now think will happen may be turn out much different,
and our assumptions may prove to have been inaccurate or incomplete.

     The investment risks discussed under "Risk Factors" specifically address
all of the material risk factors that may influence future operating results and
financial performance. Those investment risks are not "boiler plate" but are
intended to tell you about the uncertainties and risks inherent in our business
at the present time which you need to evaluate before making your investment
decision.

                            DESCRIPTION OF SECURITIES

     COMMON STOCK. We are authorized by our articles of incorporation to issue
an unlimited number of shares of common stock, $0.01 par value, and 100,000
shares of preferred stock, $0.01 par value.

     Shares of common stock may be issued for such consideration and on such
terms as determined by the board of directors, without shareholder approval.
Holders are entitled to receive dividends when and as declared by the board of
directors out of funds legally available therefor. There are no restrictions on
payment of cash dividends. Cash dividends have not been declared on the common
stock, although a 1 for 10 stock dividend was declared in November 1990. It is
anticipated that future earnings would be reinvested into operations and not
declared as dividends on the common stock. All holders of shares of common stock
have equal voting rights, and the shares of common stock sold in this offering
will have the same rights. Holders of shares of common stock are entitled to one
vote per share on all matters upon which such holders are entitled to vote, and
further have the right to cumulate their votes in elections of

                                       16

<PAGE>



directors. Cumulation means multiplying the number of shares held, by the number
of nominees to the board of directors, then voting the product among the
nominees as desired. Directors are elected by a plurality of the votes cast.

     Shares of common stock sold in this offering are fully-paid and
nonassessable shares of U.S. Energy Corp.

     Pursuant to our articles of incorporation and as permitted by Wyoming law,
shares of common stock held by our subsidiaries may be voted by such
subsidiaries as determined by the board of directors of each, in elections of
directors and other matters brought before shareholders.

     In September 2001, the company adopted a shareholder rights plan ("poison
pill") and filed the plan with the Securities and Exchange Commission as an
exhibit to Form 8-A. The following three paragraphs briefly state principal
features of the plan, which are qualified by reference to the complete plan,
which is incorporated by reference into this prospectus.

     Under the plan, the holder of each share of common stock has the right to
purchase (when the rights become exercisable) from the company one-one
thousandth (1/1,000th) of one (1) share of Series P preferred stock at a price
of $200.00 for each one-one thousandth (1/1,000th) share of such preferred
stock. The purpose of the plan is to deter an unfairly low priced hostile
takeover of the company, by encouraging a hostile party to negotiate a fair
offer with the board of directors and thus eliminate the poison pill.

     The rights trade with the common stock and aren't separable therefrom; no
separate certificate for the rights is issued unless and until there is a
hostile takeover attempted, after which time separate and tradable rights
certificates would be issued.

     The rights are not exercisable and never can be unless and until a hostile
(not negotiated with the board) takeover of the company is initiated with the
objective of acquiring 15% of the company's voting stock. If before the takeover
is launched the hostile party comes to agreement with the board of directors
about price and terms and makes a "qualified offer" to buy the stock of the
company, then the board of directors may redeem (buy back) the rights for $0.01
each. But, if such a "qualified offer" isn't agreed upon, then the rights are
exercisable for preferred stock, which in turn would enable the holder to
convert the preferred stock into voting common stock of the company at a price
equal to one-half the market price.

     PREFERRED STOCK. Shares of preferred stock may be issued by the board of
directors with such dividend, liquidation, voting and conversion features as may
be determined by the board of directors without shareholder approval. In June
2000, we established a Series A Convertible Preferred Stock, for which 1,000
shares of preferred stock are reserved for sale at $10,000 per share; 200 shares
were issued and outstanding at November 30, 2001. In January 2002, we converted
the 200 outstanding shares of Series A stock by issuing 513,140 shares of
restricted common stock to the holder, based on $2,000,000 invested plus $11,507
of interest (annual rate of 7.5%) which accrued in December 2001 (previous
interest had been paid in cash), divided by $3.92 (market price for USE stock on
December 5, 2001).

     WARRANTS. As of the date of this prospectus, warrants and options (to
persons or entities other than employees, officers or directors of the company)
are issued and outstanding to purchase a total of 743,870 shares of common
stock:


                                       17

<PAGE>



     o Options to purchase 18,000 shares at $3.00 held by Robert A. Nicholas,
issued February 3, 2003 and expiring February 2, 2004, issued as partial payment
for legal services. Resale of shares acquired on exercise of these options is
covered by this resale prospectus.

     o Warrants to purchase 60,000 shares at $3.00 held by Tsunami Partners,
L.P., issued on November 19, 2002 and expiring November 19, 2005, issued in
connection with a $500,000 convertible loan to the company from Tsunami, L.P.
Resale of shares acquired on exercise of these warrants is covered by this
resale prospectus.

     o Warrants to purchase 15,000 shares at $3.00 held by 34 persons who own
equity interests in VentureRound Group ("VRG"), a licensed broker-dealer, which
served as financial advisor in connection with the Tsunami loan transaction. The
warrants were issued as of November 19, 2002, expiring on November 19, 2005.
Resale of shares acquired on exercise of these warrants is covered by this
resale prospectus.

     o Warrants to purchase 120,000 shares at $3.00 held by Caydal, LLC, issued
on May 30, 2002 and expiring May 30, 2005, issued in connection with a
convertible loan to the company from Caydal. Resale of shares acquired on
exercise of these warrants is covered by this resale prospectus.

     o Warrants to purchase 30,000 shares at $3.00 held by 31 persons who own
equity interests in VRG, which served as financial advisor in connection with
the Caydal loan transaction. The warrants were issued as of May 30, 2002,
expiring on March 30, 2005. Resale of shares acquired on exercise of these
warrants is covered by this resale prospectus.

     o Warrants to purchase 3,000 shares at $3.75 per share held by one person
who owns an equity interest in VRG, which served as the financial advisor to the
company in connection with the private transactions from June to October 2001
(see above). These warrants were issued as partial compensation for services
provided to the company by the individual, who owns an equity interest in and
who is associated (licensed) with VRG. These warrants were issued as of October
18, 2001 and expire October 18, 2006. Resale of shares acquired on exercise of
these warrants is covered by this resale prospectus.

     o Warrants to purchase 28,192 shares at $4.00 held by 36 persons who own
equity interests in VRG, issued as of March 25, 2002, expiring on March 25,
2004. VRG served as the financial advisor to the company in connection with the
private transactions in February and March 2002. Resale of shares acquired on
exercise of these warrants is covered by this resale prospectus.

     o Options to purchase 20,000 shares at $3.90 held by James E. Seale issued
as of January 10, 2002, expiring on January 9, 2005 for consulting services.
Resale of shares acquired on exercise of these options is not yet covered by a
resale prospectus.

     o Warrants to purchase 10,000 shares at $3.75 held by Kevin P. Daly, issued
as of October 18, 2001 and expiring October 18, 2003. Resale of shares acquired
on exercise of these warrants is covered by a prospectus filed pursuant to Rule
424(b)(2).

     o Warrants to purchase 50,000 shares at $3.00 held by Caydal, LLC, issued
on October 24, 2001 and expiring October 24, 2003. Resale of shares acquired on
exercise of these warrants is covered by a prospectus filed pursuant to Rule
424(b)(2).

     o Warrants to purchase 67,936 shares at $3.75 held by 18 investors who
purchased shares and warrants in private transactions with the company from June
29, 2001 to October 18, 2001. These

                                       18

<PAGE>



warrants were issued as of October 18, 2001 and expire October 18, 2006. Resale
of shares acquired on exercise of these warrants is covered by a prospectus
filed pursuant to Rule 424(b)(2).

     o Warrants to purchase 34,761 shares at $3.75 held by persons who own
equity interests in VRG, which served as the financial advisor to the company in
connection with the private transactions from June to October 2001 (see above).
These warrants were issued as partial compensation for services provided to the
company by persons who own equity interests in VRG, which services were provided
by licensed brokers . These warrants were issued as of October 18, 2001 and
expire October 18, 2006. Resale of shares acquired on exercise of these warrants
is covered by a prospectus filed pursuant to Rule 424(b)(2).

     o Warrants to purchase 11,034 shares at $3.75 held by persons who own
equity interests in VRG. These warrants were issued for financial consulting
services provided by persons who own equity interests in VRG. The services were
provided by licensed brokers. These warrants were issued as of November 2, 2001
and expire November 2, 2006. Resale of shares acquired on exercise of these
warrants is covered by a prospectus filed pursuant to Rule 424(b)(2).

     o Warrants to purchase 74,564 shares at $3.64, issued in exchange for
Yellowstone Fuels Corporation (a subsidiary of USE) warrants under a share and
warrant exchange agreement between YSFC and USE. The warrants expire July 19,
2003, and were issued to 23 persons who had been associated (licensed) with a
broker-dealer (American Fronteer, f/k/a RAF Financial) which raised funds for
YSFC in 1997. Resale of shares acquired on exercise of these warrants is covered
by this resale prospectus.

     o Options issued February 8, 1999 to purchase 75,000 shares at $2.25 per
share (expiring February 8, 2004), to consultant Michael Baybak. Resale of the
shares acquired on exercise of these options is not covered by a resale
prospectus.

     o Options issued February 8, 1999 to purchase 20,000 shares at $2.62 per
share (expiring March 15, 2003), to (former) consultant R. J. Falkner. Resale of
the shares acquired on exercise of these options is covered by a prospectus
filed pursuant to Rule 424(b)(2).

     o Warrants issued May 14, 2001 to purchase 10,000 shares at $4.70 per share
(expiring May 14, 2003), to consultant Riches in Resources, Inc. The warrants
are not exercisable unless the company's stock price closes at or above $6.50
per share for 90 consecutive days before expiration of the options. Resale of
the shares acquired on exercise of these options is covered by a prospectus
filed pursuant to Rule 424(b)(2).

     o Warrants issued May 14, 2001 to purchase 20,000 shares at $4.70 per share
(expiring May 14, 2003), to consultant Riches in Resources, Inc. The warrants
are not exercisable until the company's stock price closes at or above $10.00
per share for 90 consecutive days. Resale of the shares acquired on exercise of
these options is covered by a prospectus filed pursuant to Rule 424(b)(2).

     o Options issued April 11, 2001 to purchase 20,000 shares at $3.98 per
share, expiring April 10, 2006, to (former) consultant R. J. Falkner and
Company. Resale of the shares acquired on exercise of these options is covered
by a prospectus filed pursuant to Rule 424(b)(2).

     o Warrants to purchase 56,383 shares at $4.00 per share, held by 16
investors who purchased shares and warrants in private transactions with the
company in February and March, 2002. These warrants were issued in February and
April 2002, and will expire two years after issuance. Resale of the shares
acquired on exercise of these options is not yet covered by a resale prospectus.


                                       19

<PAGE>



     OPTIONS. USE has granted options to employees, officers and directors to
purchase shares at exercise prices from $2.00 to $3.90 per share. At March 6,
2003, a total of 3,690,945 shares may be issued upon exercise of these options.
These options expire at various times from 2008 to 2012.

                                 USE OF PROCEEDS

     We will not receive any of the proceeds from the sale of the shares by the
selling shareholders pursuant to this prospectus, but we will receive up to
$1,124,431 in proceeds from the exercise of the options and warrants, if they
exercise all the options and warrants, (pursuant to which the shares underlying
such options and warrants will be sold pursuant to this prospectus), which will
be used by the company for working capital.

                              SELLING SHAREHOLDERS

     This prospectus covers the offer and sale by the selling shareholders of up
to 882,460 shares of common stock ($0.01 par value) owned or to be owned on
exercise of options and warrants by the selling shareholders, and conversion of
debt. The footnotes to the table below give information about shares issuable on
exercise of the options and warrants by the selling shareholders. All shares
issued (and all shares issuable on exercise of options and warrants, and
conversion of debt) are (and will be) restricted securities as that term is
defined in rule 144 of the Securities and Exchange Commission under the
Securities Act of 1933, and will remain restricted unless and until such shares
are sold pursuant to this prospectus, or otherwise are sold in compliance with
rule 144 or the restriction removed in accordance with rule 144(k).

     None of the selling shareholders are affiliates of the company or any
subsidiary of the company.

     o    28,192 shares under warrants held by 36 persons who own equity
          interests in VRG, exercisable at $4.00 per share.

     o    333,333 shares which may be issued if $1,000,000 principal on a
          secured convertible note held by Caydal, LLC is converted to common
          shares at a rate of 1 share for $3.00 of principal.

     o    120,000 shares under warrants held by Caydal, LLC, a private lender
          and shareholder of U.S. Energy Corp., exercisable at $3.00 per share.

     o    30,000 shares under warrants held by 31 persons who own equity
          interests in VRG, exercisable at $3.00 per share.

     o    3,000 shares under warrants held by one person who owns an equity
          interest in VRG, exercisable at $3.75 per share.

     o    74,564 shares under warrants, exercisable at $3.64 held by 23 persons
          who had been associated (licensed) with a broker-dealer which raised
          funds for Yellowstone Fuels Corp., a subsidiary of the company, under
          a private placement of YSFC common stock in 1997. The YSFC warrants
          were exchanged for warrants of the company in 1999. The warrants
          expire July 19, 2003.

     o    166,666 shares which may be issued if $500,000 principal on a secured
          convertible note held by Tsunami Partners, L.P. is converted to common
          shares at a rate of 1 share for $3.00 of principal.

                                       20

<PAGE>



     o    60,000 shares under warrants held by Tsunami Partners, L.P.,
          exercisable at $3.00 per share. These warrants expire November 19,
          2005.

     o    15,000 shares under warrants held by 34 persons who own equity
          interests in VRG, exercisable at $3.00 per share. These warrants
          expire November 19, 2005.

     o    20,000 shares held by two trusts issued to them in settlement of a
          lawsuit involving the company's subsidiary Sutter Gold Mining Company.

     o    18,000 shares under options held by one person, which options were
          issued as partial payment for legal services, exercisable at $3.00 per
          share. These options expire February 2, 2004.

     o    13,705 shares held by two persons, which shares were issued as partial
          payment for legal services.

     The selling shareholders may offer their shares for sale on a continuous
basis pursuant to rule 415 under the 1933 Act.

     The following information has been provided to us by the selling
shareholders. All numbers of shares, and percentage ownership, are stated on a
pro forma basis as of prospectus date assuming issuance of 348,756 shares upon
exercise of all options and warrants listed above, and issuance of the 499,999
shares upon conversion of the principal payments of the two secured convertible
notes. There are 12,189,776 shares issued and outstanding on the initial date of
this prospectus; on a pro forma basis, 13,038,531 shares are outstanding, which
number assumes exercise only of the options and warrants (and conversion of
debt) held by the selling shareholders which are covered by this prospectus.
Additional shares issuable on possible exercise of additional options and
warrants presently outstanding, are not included in the pro forma calculation
above.



                                       21

<PAGE>


<TABLE>
<CAPTION>

                                               Number of           Number of Shares
                                               Shares of            of Common Stock            Percent Owned
Name and Address                             Common Stock             Registered           Prior to        After
of Beneficial Owner                            Owned(1)                For Sale            Offering     Offering(2)
- -------------------------------------------------------------------------------------------------------------------

<S>                                         <C>                       <C>                      <C>           <C>
A. Clinton Allen                            18,909 (4)(5)(6)          10,924 (5)(6)            *             *
1280 Massachusetts Ave. #200
Cambridge, MA 02138

Andy Galy                                   1,100 (7)                 1,100 (7)                *             *
342 30th Street
New Orleans, LA 80203

Ardell J. Schelich                          42,026 (4)(5)(6)          682 (5)(6)               *             *
347 Lake View Dr.
Washington, MO 93090

Bathgate McColley & Associates LLC          538 (4)                   538 (4)                  *             *
5350 S. Roslyn Street, Suite 308
Greenwood Village, CO 80111

Belmont Navy, LLC                           1,167 (4)(5)(6)           682 (5)(6)               *             *
111 Sixth Street
Cambridge, MA 02141

Ben Bourgeois                               192 (7)                   192 (7)                  *             *
3504 Lake Arrowhead
Harvey, LA 70058

Bourne Capital LLC                          1,595 (5)(6)              1,595 (5)(6)             *             *
410 Marion Street
Denver, CO 80218

Caydal, LLC                                 673,333 (3)(6)            453,333 (3)(6)          5.1%        1.6%
410 Marion Street
Denver, Colorado 80218

Chris Donofrio                              275 (7)                   275 (7)                  *             *
First Funding
848 W. Eastman, Suite 204
Chicago, IL 60622

Curragh Capital Partners, LLC               1,500 (6)                 1,500 (6)                *             *
609 5th Avenue, 2nd Floor
New York, NY 10017

David Berkowitz                             412 (7)                   412 (7)                  *             *
2013 Ottawa Drive
Las Vegas, NV 89109

David Berlin                                1,167 (4)(5)(6)           682 (5)(6)               *             *
Birchwood Resources
1675 Broadway #1020
Denver, CO 80202
</TABLE>



                                       22

<PAGE>


<TABLE>
<CAPTION>

                                               Number of           Number of Shares
                                               Shares of            of Common Stock            Percent Owned
Name and Address                             Common Stock             Registered           Prior to        After
of Beneficial Owner                            Owned(1)                For Sale            Offering     Offering(2)
- -------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                       <C>                      <C>           <C>
David Gertz                                 1,167 (4)(5)(6)           682 (5)(6)               *             *
7120 E. Orchard Rd. #300
Greenwood Village, CO 80111

Donna Schulze                               3,208 (4)(6)(7)           2,708 (6)(7)             *             *
877 E. Dry Creek Rd.
Englewood, CO 80112

Edward J. Godin                             1,000 (6)                 1,000 (6)                *             *
7424 S. Chapparal Circle East
Aurora, CO 800016

Edward Swift and                            10,000                    10,000                   *             *
Margaret Swift Revocable Trust
50 Church Street, P. O. Box 128
Sutter Creek, CA 95685

Eric Stroud                                 1,100 (7)                 1,100 (7)                *             *
7715 Dairy Lane
Village of Lakewood, IL 60014

George D. Thompson                          285 (4)(5)(6)             170 (5)(6)               *             *
11710 W. 102 Place
Overland Park, KS 66214

Greg Powers                                 165 (7)                   165 (7)                  *             *
709 7th Lane
Palm Beach Gardens, FL 33418

Gulf Projects Investment Company            4,670 (4)(5)(6)           2,720 (5)(6)             *             *
Kuwait Stock Exchange Building
Safat 13066, Kuwait

James A. McCaughey                          83,268 (4)(5)(6)          1,699 (5)(6)             *             *
3 Cueta Drive
Rancho Mirage, CA 92270

James E. Hosch                              1,231 (5)                 1,231 (5)                *             *
7038 Willa Lane
Evergreen, CO 80439

James J. Cahill                             26,148 (4)(5)(6)          15,648 (5)(6)            *             *
57 Lawrence Hill Rd.
Huntington, NY 11743

James V. Rauh                               19,036 (4)(5)(6)          339 (5)(6)               *             *
7234 South Uravan Ct.
Aurora, CO 60016
</TABLE>



                                       23

<PAGE>


<TABLE>
<CAPTION>

                                               Number of           Number of Shares
                                               Shares of            of Common Stock            Percent Owned
Name and Address                             Common Stock             Registered           Prior to        After
of Beneficial Owner                            Owned(1)                For Sale            Offering     Offering(2)
- -------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                       <C>                      <C>           <C>

Jeffrey J. Schmitz                          4,266 (4)(5)(6)           339 (5)(6)               *             *
10356 E. Weaer Circle
Englewood, CO 80111

John J. Lais, III                           30,574 (4)(5)(6)          339 (5)(6)               *             *
2602 Woodland Ct.
McKinney, TX 75070

John P. Kanouff                             31,335 (7)                31,335 (7)               *             *
2525 E. Cedar Avenue
Denver, CO 80209

John Shuster                                5,288 (7)                 1,788 (7)                *             *
21379 York Ct.
Kildeer, IL 60047

Kurt Novey                                  1,450 (7)                 550 (7)                  *             *
4224 Nasyth Drive
Plano, TX 75093

Lance Hering                                2,175 (4)(5)              675 (5)                  *             *
5301 S. Yosemite St., Apt. 26206
Greenwood Village, CO 80111

Larry A. Bach & Susan A. Bach               285 (4)(5)(6)             170 (5)(6)               *             *
501 W. Fairbanks Avenue
Winter Park, FL 32789

Leonard Alsfeld                             550 (7)                   550 (7)                  *             *
4705 Rebecca Blvd.
Metarie, LA 70003

Mark A. Loewenstein &                       40,636 (4) (6)            135 (6)                  *             *
Kangping K. Loewenstein
12512 White Drive
Silver Spring, MD 20904

Mark Reinstein                              1,760 (7)                 1,760 (7)                *             *
180 E. Meadows Ct.
Alpharetta, GA 30006

Marshall G. Folkes, III                     24,749 (4)(5)(6)          339 (5)(6)               *             *
3841 Houndstooth Court
Richmond, VA 23233
</TABLE>



                                       24

<PAGE>


<TABLE>
<CAPTION>

                                               Number of           Number of Shares
                                               Shares of            of Common Stock            Percent Owned
Name and Address                             Common Stock             Registered           Prior to        After
of Beneficial Owner                            Owned(1)                For Sale            Offering     Offering(2)
- -------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                       <C>                      <C>           <C>

Martin G. Williams &                        574 (4)(5)(6)             339 (5)(6)               *             *
Margaret M. Williams
13333 Long Leaf Dr.
Clarksville, MD 21029

Maury Rogow                                 925 (4)(5)(6)             540 (5)(6)               *             *
1050 Taylor Street N #709
Arlington, VA 22201

Michael Bagnulo                             412 (7)                   412 (7)                  *             *
1020 Martins Lake
Roswell, GA 30076

Mike Nixon                                  704 (7)                   704 (7)                  *             *
43557 Window Ct.
Ashburn, VA 20147

Mildred Swift McBride                       10,000                    10,000                   *             *
Testamentary Trust
50 Church Street, P. O. Box 128
Sutter Creek, CA 95685

Mohamed Ali Ahmed                           574 (4)(5)(6)             339 (5)(6)               *             *
5052 Grimm Dr. #512
Alexandria, VA 23233

Morgan Stanley Dean Witter                  574 (4)(5)(6)             339 (5)(6)               *             *
FBO Thomas Garrity
1857 Wainwright Dr.
Reston, VA 20190

Peyton N. Jackson &                         12,190 (4)(5)(6)          845 (5)(6)               *             *
Linda M. Jackson
8704 Standish Rd.
Alexandria, VA 22308

Philip A. Nicholas                          8,231                     8,231                    *             *
170 North 5th Street
P. O. Box 928 Laramie, WY 82703

R. A. Fitzner, Jr.                          3,574 (4)(5)(6)           3,339 (4)(5)(6)          *             *
P. O. Box 8000-260
Mesquite, NV 89024

Fiserv Securities Inc.  C/FBO               1,731 (5)                 193 (5)                  *             *
Richard Huebner
16318 E. Berry Avenue
Centennial, CO 0115
</TABLE>



                                       25

<PAGE>


<TABLE>
<CAPTION>

                                               Number of           Number of Shares
                                               Shares of            of Common Stock            Percent Owned
Name and Address                             Common Stock             Registered           Prior to        After
of Beneficial Owner                            Owned(1)                For Sale            Offering     Offering(2)
- -------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                       <C>                      <C>           <C>

Robert A. Nicholas                          26,639 (8)                23,474 (8)               *             *
107 South Broadway, Suite 213
Riverton, WY 82501

Robert H. Taggart, Jr.                      45,148 (4)(5)(6)          14,648 (5)(6)            *             *
4163 S. Chapparrel Circle East
Aurora, CO 80116

Robert Long                                 31,335 (7)                31,335 (7)               *             *
3125 Riverside Dr.
Riverton, WY 82501

Roger Conan                                 574 (4)(5)(6)             339 (5)(6)               *             *
14 Oakley Road
Dublin 6, Ireland

Roy Van Buskirk & Rachel Deutsch            872 (4)(5)(6)             512 (5)(6)               *             *
1616 Buchanan St.
Arlington, VA 22207

Sterne Agee & Leach, Inc.                   19,036 (4)(5)(6)          339 (5)(6)               *             *
C/F Michael M. Vuocolo IRA
407 Arrowhead BL 123
Jonesboro, GA 30236

Steve Smitten                               137 (7)                   137 (7)                  *             *
5520 Reflections Blvd.
Lutz, FL 33588

Fiserv Securities Inc.  C/FBO               1,835 (5)                 296 (5)                  *             *
Steven Bathgate
6376 E. Tufts Avenue
Englewood, CO 80112

SJS Holdings                                5,909 (4)(5)(6)           3,409 (5)(6)             *             *
c/o Susan Schoch
350 East 84th Street
New York, NY 10028

Tom Bazely                                  137 (7)                   137 (7)                  *             *
5021 Seminary Rd. #327
Alexandria, VA 22311

Troy G. Taggart                             9,444 (4)(5)(6)(7)        5,444 (5)(6)(7)          *             *
21220 Craborchard Ct.
Ashburn, VA 20147

Tsunami Partners, L.P.                      226,666 (3)(5)            226,666 (3)(5)        1.8%             *
2011 Cedar Springs Rd., Apt. 506
Dallas, TX 75201
</TABLE>


                                       26

<PAGE>


<TABLE>
<CAPTION>

                                               Number of           Number of Shares
                                               Shares of            of Common Stock            Percent Owned
Name and Address                             Common Stock             Registered           Prior to        After
of Beneficial Owner                            Owned(1)                For Sale            Offering     Offering(2)
- -------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                       <C>                      <C>           <C>

Vicki D.E. Barone                           51 (5)                    51 (5)                   *             *
7854 S. Harrison Circle
Littleton, CO 80122

Vincent Schmitz                             22,629 (4)(5)(6)          682 (5)(6)               *             *
4207 Montview Blvd.
Denver, CO 80207

Wayne A. Moore                              1,167 (4)(5)(6)           682 (5)(6)               *             *
P. O. Box 68
Rock Falls, IL 61071

William Gamello                             550 (7)                   550 (7)                  *             *
19 West Sky Lane
Clifton Park, NY 12065

William Gavin Kessler                       275 (7)                   275 (7)                  *             *
1921 Bissell - Unit C
Chicago, IL 60614

William Potter                              159 (5)(6)                159 (5)(6)               *             *
498 Ridgewood Avenue
Glen Ridge, NJ 07028

William Powers                              550 (7)                   550 (7)                  *             *
19900 Earlwood Dr.
Jupiter, FL 33458

William Todd Mauney                         137 (7)                   137 (7)                  *             *
600 Rainier Ct.
Highland Village, TX 75077
</TABLE>

*    Less than 1%.

(1)  Includes shares underlying warrants which may not have yet been exercised
     and are not covered by this resale prospectus.

(2)  Assumes all shares registered for resale under this prospectus are sold by
     the selling shareholder.

(3)  Includes shares issuable upon conversion of principal payments to shares at
     a rate of 1 share for $3.00 of principal payable on a convertible secured
     promissory note.

(4)  Includes shares issuable on exercise of warrants at $3.75 per share, and
     assumes exercise of such warrants by the selling shareholder.

(5)  Includes shares issuable on exercise of warrants at $4.00 per share, and
     assumes exercise of such warrants by the selling shareholder.


                                       27

<PAGE>



(6)  Includes shares issuable on exercise of warrants at $3.00 per share, and
     assumes exercise of such warrants by the selling shareholder.

(7)  Includes shares issuable on exercise of warrants at $3.64 per share, and
     assumes exercise of such warrants by the selling shareholder.

(8)  Includes shares issuable on exercise of warrants at $3.00 per share, and
     assumes exercise of such warrants by the selling shareholder.

     The shares owned or to be owned by the selling shareholders are registered
under rule 415 of the general rules and regulations of the Securities and
Exchange Commission, concerning delayed and continuous offers and sales of
securities. In regard to the offer and sale of such shares, we have made certain
undertakings in Part II of the registration statement of which this prospectus
is part, by which, in general, we have committed to keep this prospectus current
during any period in which the selling shareholders make offers to sell the
covered securities pursuant to rule 415.

                              PLAN OF DISTRIBUTION

     The selling shareholders and any of their pledgees, donees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded. These sales may be at fixed or negotiated prices. The selling
shareholders may use any one or more of the following methods when selling
shares:

     O    ordinary brokerage transactions and transactions in which the
          broker-dealer solicits purchasers;

     O    block trades in which the broker-dealer will attempt to sell the
          shares as agent but may position and resell a portion of the block as
          principal to facilitate the transaction;

     O    purchases by a broker-dealer as principal and resale by the
          broker-dealer for its account;

     O    an exchange distribution in accordance with the rules of the
          applicable exchange;

     O    privately negotiated transactions;

     O    short sales (sales of shares not owned in hopes of a decline in market
          price so the seller can purchase in the market at a lower price to be
          able to deliver the shares sold);

     O    broker-dealers may agree with the selling shareholder to sell a
          specified number of such shares at a stipulated price per share;

     O    a combination of any such methods of sale; and

     O    any other method permitted pursuant to applicable law.

     The selling shareholders also may resell all or a portion of the shares in
open market transactions in reliance upon rule 144 under the 1933 Act, provided
they meet the criteria and conform to the requirements of the rule.


                                       28

<PAGE>



     The selling shareholders may also engage in short sales against the box (a
short sale where the seller borrows the stock from a third party, hoping the
market price will decline), puts and calls and other transactions in securities
of the company or derivatives of company securities and may sell or deliver
shares in connection with these trades. The selling shareholders may pledge
their shares to their brokers under the margin provisions of customer
agreements. If a selling shareholder defaults on a margin loan, the broker may,
from time to time, offer and sell the pledged shares. The selling shareholders
have advised the company that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of their his shares other than ordinary course brokerage arrangements,
nor is there an underwriter or coordinating broker acting in connection with the
proposed sale of shares by the selling shareholders.

     Broker-dealers engaged by the selling shareholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling shareholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling shareholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.

     We are required to pay all fees and expenses incident to the registration
of resale of the shares covered by this prospectus. However, all discounts,
commissions or fees incurred in connection with the sale of the shares offered
hereby will be paid by the selling shareholders. The company has agreed to
indemnify the selling shareholders against certain losses, claims, damages and
liabilities, including liabilities under the 1933 Act. We have been advised that
in the opinion of the Securities and Exchange Commission, indemnification for
liabilities under the 1933 Act is against public policy, and therefore is
unenforceable. See below.

         In order to comply with the securities laws of certain states, if
     applicable, the shares will be sold in such jurisdictions, if required,
only through registered or licensed brokers or dealers. In addition, in certain
states the shares may not be sold unless the shares have been registered or
qualified for sale in such state or an exemption from registration or
qualification is available.

                      DISCLOSURE OF COMMISSION POSITION ON
                 INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

     Our articles of incorporation and bylaws provide that we shall indemnify
directors provided that the indemnification shall not eliminate or limit the
liability of a director for breach of the director's duty or loyalty to the
corporation or its stockholders, or for acts of omission not in good faith or
which involve intentional misconduct or a knowing violation of law.

     Wyoming law permits a corporation, under specified circumstances, to
indemnify its directors, officers, employees or agents against expenses
(including attorney's fees), judgments, fines and amounts paid in settlements
actually and reasonably incurred by them in connection with any action, suit or
proceeding brought by third parties by reason of the fact that they were or are
directors, officers, employees or agents of the corporation, if these directors,
officers, employees or agents acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceedings, had no
reason to believe their conduct was unlawful. In a derivative action, i.e., one
by or in the right of the corporation, indemnification may be made only for
expenses actually and reasonably incurred by directors, officers, employees or
agent in connection with the defense or settlement of an action or suit, and
only with respect to a matter as to which they shall have acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made if
such person shall have been adjudged liable to the corporation, unless and only
to the extent that the court in which the action or suit was brought shall
determine upon application that the defendant directors, officers, employees or
agents are fairly and reasonably entitled to indemnify for such expenses despite
such adjudication of liability.

                                       29

<PAGE>



     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
company pursuant to the foregoing provisions, or otherwise (for example, in
connection with the sale of securities), we have been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the 1933 Act, and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the company of expenses incurred or paid by a director, officer or controlling
person in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, the company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Securities Act, and will be
governed by the final adjudication of such issue.

                     WHERE TO FIND MORE INFORMATION ABOUT US

     We have filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 under the 1933 Act with
respect to the shares offered by this prospectus. This prospectus, filed as a
part of the registration statement, does not contain certain information
contained in part II of the registration statement or filed as exhibits to the
registration statement. We refer you to the registration statement and exhibits
which may be inspected and copied at the Public Reference Section of the
Commission, 450 5th Street, NW, Washington, D.C. 20549, at prescribed rates; the
telephone number for the Public Reference Section is 1.800.SEC.0330. The
registration statement and exhibits also are available for viewing at and
downloading from the EDGAR location within the Commission's internet website
(http://www.sec.gov).

                INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

     Our common stock is registered with the Commission under section 12(g) of
the Securities Exchange Act of 1934 (the "1934 Act"). Under the 1934 Act, we
file with the Commission periodic reports on Forms 10-K, 10-Q and 8-K, and proxy
statements, and our officers and directors file reports of stock ownership on
Forms 3, 4 and 5. These filings may be viewed and downloaded from the
Commission's internet website (http://www.sec.gov) at the EDGAR location, and
also may be inspected and copied at the Public Reference Section of the
Commission, 450 5th Street, NW, Washington, D.C. 20549, at prescribed rates; the
telephone number for the Public Reference Section is 1.800.SEC.0330. Information
on the operation of the Public Reference Room can be obtained by calling the
Commission at 1.800.SEC.0330.

     All of the information contained in the following documents filed with the
Commission is incorporated by reference into this prospectus: Amended Annual
Report on Form 10-K/A for fiscal year ended May 31, 2002 filed March 3, 2003;
Quarterly Report on Form 10-Q for the three months ended August 31, 2002;
Quarterly Report on Form 10-Q for the three and six months ended November 30,
2002; Proxy Statement for Annual Meeting of Shareholders in December 2002;
Report on Form 8-K on September 20, 2001, reporting adoption in calendar 2001 of
a "shareholder rights plan" also commonly known as a "poison pill"; and Report
on Form 8-K on December 20, 2001 regarding status of coalbed methane operations;
Report on Form 8-K on April 23, 2002, reporting that Suncor did not exercise an
option to acquire interest in coalbed methane properties and reporting a
contract to purchase the Bobcat coalbed methane property in Wyoming; Form 8-K on
June 6, 2002, reporting closing of the contract to purchase the Bobcat property;
Form 8-K on June 10, 2002, providing further information on the closing of the
contract to purchase the Bobcat property, and borrowing $1,000,000 in a secured
convertible loan transaction; Form 8-K on July 23, 2002, reporting the Phelps
Dodge legal proceedings; Report on Form 8-K on August 20, 2002, reporting the
entry of an order by the Special Master (appointed by the Court in the Nukem
litigation) to provide monthly reports on uranium transactions; Form 8-K on
September 5, 2002 concerning a research report; Form 8-K/A on September 24, 2002
amending the Form 8-K on the research report; Form 8-K on December 9, 2002
reporting an extension of time granted the Special Master

                                       30

<PAGE>



in the Nukem litigation to file his final accounting report and borrowing
$500,000 in a secured convertible debt transaction; Form 8-K on December 18,
2002 reporting results of the company's annual meeting of shareholders and
change in fiscal year end; Form 8-K on January 8, 2003 reporting RMG option to
purchase coalbed methane properties; Form 8-K on February 7, 2003 reporting an
Option Agreement to acquire additional coalbed methane properties, exploration
results on Montana properties now held, and improved gas prices for Bobcat
production; Form 8-K on March 3, 2003 reporting an additional extension of time
granted the Special Master in the Nukem litigation to file his final accounting
report; and Form 8-A, on September 20, 2001, registering the preferred stock
purchase rights (in connection with the shareholder rights plan). The SEC file
number for all of these filings is 000-06814.

     All of the information which will be contained in our future Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q, Proxy Statements, and Reports on
Form 8-K, and any other filings we make pursuant to sections 13(a), 13(c), 14 or
15(d) of the 1934 Act, all after the date of this prospectus, also are
incorporated by reference into this prospectus as of the dates when such
documents are filed with the Commission.

     We will provide to you copies of any or all of the information in these
documents, and any exhibits to them, without charge, upon request addressed to
U.S. Energy Corp., 877 North 8th West, Riverton, Wyoming 82501, attention Daniel
P. Svilar, Secretary. You also may request these documents by telephone:
1.307.856.9271. Our internet address is www.useg.com. Our 1934 Act filings are
not directly available through our internet address (website), but you can
access those filings through the link to Nasdaq at our internet address
(website).

                                  LEGAL MATTERS

     The validity of the issuance of the shares offered has been passed upon by
The Law Office of Stephen E. Rounds, Denver, Colorado.

                                     EXPERTS

     Our consolidated balance sheet as of May 31, 2002 and 2001 and the related
consolidated statements of operations, shareholders' equity and cash flows for
the year ended May 31, 2002 and 2001, have been audited by Grant Thornton LLP,
and are included, with the audit report from Grant Thornton LLP, in the Annual
Report on Form 10-K for the fiscal year ended May 31, 2002 in reliance upon the
authority of such firm as experts in accounting and auditing. Our consolidated
balance sheet as of May 31, 2000 and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the two years ended
May 31, 2000, have been audited by Arthur Andersen LLP, and are included along
with the audit report of Arthur Andersen LLP, in the Annual Report on Form
10-K/A for the fiscal year ended May 31, 2002, as amended, in reliance upon the
authority of such firm as experts in giving said report. Arthur Andersen LLP has
not consented to the incorporation by reference of their report in this
prospectus, and we have dispensed with the requirement to file their consent in
reliance upon rule 437a of the Securities Act of 1933. Because Arthur Andersen
LLP has not consented to the incorporation by reference of their report in this
prospectus, you will not be able to recover against Arthur Andersen LLP under
Section 11 of the Securities Act of 1933 for any untrue statements of a material
fact contained in the financial statements audited by Arthur Andersen LLP or any
omissions to state a material fact required to be stated therein.

     The letter report of Ryder Scott Company, which contains certain
information with respect to the company's gas reserves, has been filed as an
exhibit to the registration statement of which this prospectus forms a part. The
information contained in the Ryder Scott Company report is included in this
prospectus in reliance on such firm as experts in such matters.

                                       31

<PAGE>




                           882,460 SHARES COMMON STOCK

                                U.S. ENERGY CORP.


                               -------------------
                                   PROSPECTUS
                              --------------------


                            ___________________, 2003


     No dealer, salesman or other person is authorized to give any information
or make any information or make any representations not contained in the
prospectus with respect to the offering made hereby. This prospectus does not
constitute an offer to sell any of the securities offered hereby in any
jurisdiction where, or to any person to whom it is unlawful to make such an
offer. Neither the delivery of this prospectus nor any sale made hereunder
shall, under any circumstances, create an implication that there has been no
change in the information set forth herein or in the business of our company
since the date hereof.


                                       32

<PAGE>



                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

         Estimated expenses in connection with the issuance and distribution of
the securities being registered:

Securities and Exchange Commission registration fee...................$   251.10
National Association of Securities Dealers, Inc. examination fee......       n/a
Accounting ...........................................................  2,000.00
Legal fees and expenses...............................................  2,000.00
Printing .............................................................       n/a
Blue Sky fees and expenses (excluding legal fees).....................    250.00
Transfer agent .......................................................       n/a
Escrow agent..........................................................       n/a
Miscellaneous.........................................................       n/a

Total.................................................................$ 4,501.10

The Registrant will pay all of these expenses.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

     Our articles of incorporation and bylaws provide that we shall indemnify
directors provided that the indemnification shall not eliminate or limit the
liability of a director for breach of the director's duty or loyalty to the
corporation or its stockholders, or for acts of omission not in good faith or
which involve intentional misconduct or a knowing violation of law.

     Wyoming law permits a corporation, under specified circumstances, to
indemnify its directors, officers, employees or agents against expenses
(including attorney's fees), judgments, fines and amounts paid in settlements
actually and reasonably incurred by them in connection with any action, suit or
proceeding brought by third parties by reason of the fact that they were or are
directors, officers, employees or agents of the corporation, if these directors,
officers, employees or agents acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceedings, had no
reason to believe their conduct was unlawful. In a derivative action, i.e., one
by or in the right of the corporation, indemnification may be made only for
expenses actually and reasonably incurred by directors, officers, employees or
agent in connection with the defense or settlement of an action or suit, and
only with respect to a matter as to which they shall have acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made if
such person shall have been adjudged liable to the corporation, unless and only
to the extent that the court in which the action or suit was brought shall
determine upon application that the defendant directors, officers, employees or
agents are fairly and reasonably entitled to indemnify for such expenses despite
such adjudication of liability.


                                       33

<PAGE>



ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULE.

                                                                      SEQUENTIAL
EXHIBIT NO.   TITLE OF EXHIBIT                                          PAGE NO.

3.1           USE Restated Articles of Incorporation.........................[2]

3.1(a)        USE Articles of Amendment to
              Restated Articles of Incorporation.............................[4]

3.1(b)        USE Articles of Amendment
              (Second) to Restated Articles
              of Incorporation (Establishing Series
              A Convertible Preferred Stock..................................[9]

3.1(c)        Articles of Amendment (Third) to
              Restated Articles of Incorporation
              (Increasing number of authorized shares)......................[14]

3.2           USE Bylaws, as amended through April 22, 1992..................[4]

4.1           Amendment to USE 1998
              Incentive Stock Option Plan
              (To include Family Transferability
              of Options Under SEC Rule 16b)................................[11]

4.2           USE 1998 Incentive Stock Option Plan
              and Form of Stock Option Agreement 1/99........................[8]

4.3           USE Restricted Stock Bonus Plan,
              as amended through 2/94........................................[5]

4.4           Form of Stock Option Agreement, and Schedule
              Options Granted January 1, 1996................................[6]

4.5           Form of Stock Option Agreement and Schedule,
              Options Granted January 10, 2001..............................[11]

4.6           Form of Investors' Warrant issued in
              February and March 2002, and
              List of Holders...............................................[21]

4.7           USE 1996 Officers' Stock Award Program (Plan)..................[7]

4.8           USE Restated 1996 Officers' Stock Award Plan and
              Amendment to USE 1990 Restricted Stock Bonus Plan..............[7]


                               34

<PAGE>



4.9           Warrant held by Caydal LLC....................................[13]

4.10          Warrant held by Kevin P.  Daly................................[13]

4.11          Rights Agreement, dated as of September 19,  2001
              between U.S. Energy Corp. and Computershare
              Trust Company, Inc. as Rights Agent.  The Articles of
              Amendment to Articles of Incorporation creating the
              Series P Preferred Stock is included herewith as an
              exhibit to the Rights Agreement.
              Form of Right Certificate (as an exhibit to the
              Rights Agreement).

              Summary of Rights, which will be sent to all holders of
              record of the outstanding shares of Common Stock of the
              registrant, also included as an exhibit to the
              Rights Agreement..............................................[12]

4.12          Form of Advisor Warrant dated October 18, 2001
              and List of Holders ..........................................[14]

4.13          Form of Advisor Warrant dated November 2, 2001
              and List of Holders...........................................[14]

4.14          Form of Investor Warrant dated October 18, 2001
              and List of Holders...........................................[14]

4.15          Stock Option held by R. Jerry Falkner
              dated April 11, 2001..........................................[14]

4.16          Warrant held by Riches In Resources
              dated May 14, 2001............................................[14]

4.17          Stock Option held by R. Jerry Falkner dated
              October 11, 1999 and Amendment thereto........................[15]

4.18          Amendment dated April 25, 2002 to
              October 11, 1999 Stock Option
              Agreement held by R.  Jerry Falkner...........................[16]

4.19          USE 2001 Incentive Stock Option Plan
              with Form of Option Agreement.................................[18]

4.20          USE Schedule of Options
              Issued - 12/7/01 and 5/20/01..................................[18]

4.21          USE 2001 Officers' Stock Compensation Plan....................[18]

4.22          Warrant held by Tsunami Partners, L.P............................*



                               35

<PAGE>



4.23          Amendment dated December 10, 2002 to
              October 11, 1999 Stock Option
              Agreement held by R. Jerry Falkner............................[20]

4.24          Stock Option held by Robert Nicholas.............................*

4.25          Form of Warrant, Amendment
              thereto and List of Holders
              (Yellowstone Fuels Corp./USE Exchange)...........................*

5.1           Opinion re legality and consent of counsel.......................*

10.1          USECC Joint Venture Agreement - Amended as of 1/20/89..........[1]

10.2          Management Agreement with USECC................................[3]

10.3          Contract - R. J. Falkner & Company
              dated April 11, 2001..........................................[11]

10.4          Consulting Agreement - Riches In Resources
              dated May 14, 2001............................................[11]

10.5          Agreement for Strategic Services
              VentureRound Group LLC........................................[14]

10.6-10.60    [intentionally left blank]

10.61         Closing Agreement - Addendum to Agreement
              for Purchase and Sale of Assets (see Exhibit 10.62)...........[11]

10.62         Agreement for Purchase and Sale of Assets
              (Rocky Mountain Gas, Inc. and Quantum Energy LLC)..............[9]

10.63         Purchase and Sale Agreement
              CCBM, Inc. (subsidiary of Carrizo Oil & Gas, Inc.)
              and Rocky Mountain Gas, Inc...................................[16]

10.64         Purchase and Sale Agreement
              Bobcat Property...............................................[16]

10.65         Convertible Promissory Note and
              Security Agreement dated May 30, 2002.........................[17]

10.66         Convertible Promissory Note and
              Security Agreement dated November 19, 2002....................[19]

16.           Concurrence Letter from Arthur Andersen LLP
              on Change of Accounting Firms.................................[10]

21.1          Subsidiaries of Registrant....................................[11]


                               36

<PAGE>



23.1          Included in Exhibit 5.1

23.2          Consent of Independent Auditors (Grant Thornton LLP).............*

99.1          Summary of reserve report of Ryder Scott Company,
              as of December 31, 2002, with consent............................*


*  Filed herewith.
_____________

Unless otherwise indicated, the SEC File Number for each of the following
documents incorporated by reference is 000-6814.

[1]           Incorporated by reference from the like-numbered exhibit to the
              Registrant's Annual Report on Form 10-K for the year ended May 31,
              1989, filed August 29, 1989.

[2]           Incorporated by reference from the like-numbered exhibit to the
              Registrant's Annual Report on Form 10-K for the year ended May 31,
              1990, filed September 14, 1990.

[3]           Incorporated by reference from the like-numbered exhibit to the
              Registrant's Annual Report on Form 10-K for the year ended May 31,
              1991, filed September 13, 1991.

[4]           Incorporated by reference from the like-numbered exhibit to the
              Registrant's Annual Report on Form 10-K for the year ended May 31,
              1992, filed September 14, 1991.

[5]           Incorporated by reference from the like-numbered exhibit to the
              Registrant's Form S-1 registration statement, initial filing (SEC
              File No. 333-1689) filed June 18, 1996).

[6]           Incorporated by reference from the like-numbered exhibit to the
              Registrant's Annual Report on Form 10-K for the year ended May 31,
              1996, filed September 13, 1996.

[7]           Incorporated by reference from the like-numbered exhibit to the
              Registrant's Annual Report on Form 10-K for the year ended May 31,
              1997, filed September 15, 1997.

[8]           Incorporated by reference from the like-numbered exhibit to the
              Registrant's Annual Report on Form 10-K for the year ended May 31,
              1998, filed September 14, 1998.

[9]           Incorporated by reference from the like-numbered exhibit to the
              Registrant's Annual Report on Form 10-K for the year ended May 31,
              2000, filed September 13, 2000.

[10]          Incorporated by reference from the like-numbered exhibit to the
              Registrant's Form 8-K, filed February 5, 2001.

[11]          Incorporated by reference from the like-numbered exhibit to the
              Registrant's Annual Report on Form 10-K for the year ended on May
              31, 2001, filed August 29, 2001, and amended on June 18, 2002 and
              September 25, 2002.

[12]          Incorporated by reference to exhibit number 4.1 to the
              Registrant's Form 8-A12G filed, September 20, 2001.


                                       37

<PAGE>



[13]          Incorporated by reference from the like-numbered exhibit to the
              Registrant's Form S-3 registration statement (SEC File No.
              333-73546), filed November 16, 2001.

[14]          Incorporated by reference from the like-numbered exhibit to the
              Registrant's Form S-3 registration statement (SEC File No.
              333-75864), filed December 21, 2001.

[15]          Incorporated by reference from the like-numbered exhibit to the
              Registrant's Form S-3 registration statement (SEC File No.
              333-83040), filed February 19, 2002.

[16]          Incorporated by reference from the like-numbered exhibit to the
              Registrant's Form S-3 registration statement, amendment no. 1 (SEC
              File No. 333-83040), filed May 17, 2002.

[17]          Incorporated by reference from the like-numbered exhibit to the
              Registrant's Form 8-K, filed June 6, 2002.

[18]          Incorporated by reference from the like-numbered exhibit to the
              Registrant's Annual Report on Form 10-K for the year ended May 31,
              2002, filed September 13, 2002.

[19]          Incorporated by reference from the like-numbered exhibit to the
              Registrant's Form 8-K, filed December 9, 2002.

[20]          Incorporated by reference from the like-numbered exhibit to the
              Registrant's Form S-3 registration statement, amendment no. 4 (SEC
              File No. 333-83040), filed March 3, 2003.

[21]          Incorporated by reference from the like-numbered exhibit to the
              Registrant's Form S-3 registration statement (SEC File No.
              333-88584), filed March 10, 2003.


                                       38

<PAGE>



ITEM 17.  UNDERTAKINGS.

     (a) RULE 415 OFFERING.

     The undersigned registrant hereby undertakes:

     (1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

         (i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;

         (ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or in the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and

         (iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.

     Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply to this
registration statement if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the registrant pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in this registration statement.

     (2) That, for the purpose of determining any liability under the Act, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

     (3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

     (b) FILING INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY REFERENCE.

     The undersigned registrant hereby undertakes that for purposes of
determining any liability under the Securities Act , each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.


                                       39

<PAGE>



     (h) RELATIVE TO REQUEST FOR ACCELERATION OF EFFECTIVE DATE.

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers, and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933, as amended, and will be governed by the final adjudication of such
issue.



                                       40

<PAGE>


                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the city of Riverton, state of Wyoming on March 7, 2003.

                                           U.S. ENERGY CORP.
                                           (Registrant)


Date: March 7, 2003                    By:   /s/  John L. Larsen
                                           -------------------------------------
                                           John L. Larsen,
                                           Chief Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this registration statement on Form S-3 has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates
indicated.


Date: March 7, 2003                    By:   /s/  John L. Larsen
                                           -------------------------------------
                                           John L. Larsen, Director


Date: March 7, 2003                    By:   /s/  Keith G. Larsen
                                           -------------------------------------
                                           Keith G. Larsen, Director


Date: March 7, 2003                    By:   /s/  Harold F. Herron
                                           -------------------------------------
                                           Harold F. Herron, Director


Date: March 7, 2003                    By:   /s/  Don C. Anderson
                                           -------------------------------------
                                           Don C. Anderson, Director


Date: March 7, 2003                    By:   /s/  Nick Bebout
                                           -------------------------------------
                                           Nick Bebout, Director


Date: March 7, 2003                    By:   /s/  H. Russell Fraser
                                           -------------------------------------
                                           H. Russell Fraser, Director


Date: March 7, 2003                    By:   /s/  Robert Scott Lorimer
                                           -------------------------------------
                                           Robert Scott Lorimer,
                                           Principal Financial Officer/
                                           Chief Accounting Officer


                                       41

<PAGE>



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.22
<SEQUENCE>4
<FILENAME>ex4-22s3initial_filing.txt
<DESCRIPTION>TSUNAMI PARTNERS WARRANT
<TEXT>


                                                                    EXHIBIT 4.22



            VOID AFTER 5:00 P.M., MOUNTAIN TIME, ON NOVEMBER 19, 2005

                       WARRANTS TO PURCHASE COMMON SHARES

                                U.S. ENERGY CORP.

This is to certify that, for value received, Tsunami Partners, L.P. (the
"Holder"), is entitled to purchase, subject to the terms set forth below, from
U.S. Energy Corp., a Wyoming corporation (the "Company" or "we"), at any time
until 5:00 P.M., Mountain Time, on November 19, 2005 (the "Expiration Date")
60,000 shares of the common stock (the "Common Shares"), of the Company at a
purchase price per share of $3.00. The number of Common Shares to be received
upon the exercise of this Warrant and the price to be paid for a Common Share
may be adjusted from time to time as hereinafter set forth. The purchase price
of a Common Share in effect at any time and as adjusted from time to time is
hereinafter sometimes referred to as the "Exercise Price." This Warrant is or
may be one of a series of warrants identical in form issued by the Company to
purchase an aggregate of Common Shares of the Company and the term "Warrants" as
used herein means all such Warrants (including this Warrant). The Common Shares,
as adjusted from time to time, underlying the Warrants are hereinafter sometimes
referred to as "Warrant Shares" and include all Common Shares that have been
issued upon the exercise of the Warrants and all unissued Common Shares
underlying the Warrants.

     (A) EXERCISE OF WARRANT. This Warrant may be exercised in whole or in part
at any time or from time to time until the Expiration Date or if the Expiration
Date is a day on which banking institutions are authorized by law to close, then
on the next succeeding day which shall not be such a day, by presentation and
surrender hereof to the Company or at the office of its stock transfer agent, if
any, with the Purchase Form annexed hereto duly executed and accompanied by cash
payment of the Exercise Price for the number of shares specified in such Form,
together with all federal and state taxes applicable upon such exercise. The
Company agrees not to merge, reorganize or take any action that would terminate
this Warrant unless provisions are made as part of such merger, reorganization
or other action which would provide the Holder with an equivalent of this
Warrant as specified in Section (i) hereof; provided, however, that if
reasonably required by the other party or parties to such merger, reorganization
or other action, the Company may accelerate the Expiration Date to a date prior
to such merger, reorganization or other action, provided further, however, that
the Company shall give the Holder written notice of such acceleration at least
30 days prior to such accelerated Expiration Date. The Company agrees to provide
notice to the Holder that any tender offer is being made for the Company's
Common Shares no later than three business days after the day the Company
becomes aware that any tender offer is being made for outstanding Common Shares
of the Company. If this Warrant should be exercised in part only, the Company
shall, upon surrender of this Warrant for cancellation, execute and deliver a
new Warrant evidencing the right of the Holder to purchase the balance of the
Common Shares purchasable hereunder. Upon receipt by the Company of this Warrant
at the office of the Company or at the office of the Company's stock transfer
agent, in proper form for exercise and accompanied by the Exercise Price, the



<PAGE>


Holder shall be deemed to be the holder of record of the Common Shares issuable
upon such exercise, notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such Common Shares shall
not then be actually delivered to the Holder.

     (B) RESERVATION OF SHARES. The Company hereby agrees that at all times
there shall be reserved for issuance and/or delivery upon exercise of this
Warrant such number of Common Shares as shall be required for issuance or
delivery upon exercise of this Warrant.

     (C) FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a Common Share called for upon any exercise hereof,
the Company shall, upon receipt by the Company or the Company's stock transfer
agent of the Exercise Price on such fractional share, pay to the Holder an
amount in cash equal to such fraction multiplied by the current market value of
such fractional share, determined as follows:

          (1) If the Common Shares are listed on a national securities exchange,
     are admitted to unlisted trading privileges on such an exchange, or are
     listed for trading on a trading system of The Nasdaq Stock Market, Inc.,
     then the current value shall be the last reported sale price of the Common
     Shares on such an exchange or system on the last business day prior to the
     date of exercise of this Warrant or if no such sale is made on such day,
     the average of the closing bid prices for the Common Shares for such day on
     such exchange or such system shall be used; or

          (2) If the Common Shares are not so listed on such exchange or system
     or admitted to unlisted trading privileges, the current value shall be the
     average of the last reported bid prices reported by the National Quotation
     Bureau, Inc. on the last business day prior to the date of the exercise of
     this Warrant; or

          (3) If the Common Shares are not so listed or admitted to unlisted
     trading privileges and if bid and asked prices are not so reported, the
     current value shall be an amount, not less than book value, determined in
     such reasonable manner as may be prescribed by the board of directors of
     the Company.

     (D) EXCHANGE, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and surrender
hereof to the Company or at the office of its stock transfer agent, if any, for
other Warrants of different denominations entitling the Holder thereof to
purchase (under the same terms and conditions as provided by this Warrant) in
the aggregate the same number of Common Shares purchasable hereunder. This
Warrant may not be sold, transferred, assigned, or hypothecated except in
compliance with the Securities Act of 1933. Any such transfer or assignment
shall be made by surrender of this Warrant to the Company or at the office of
its stock transfer agent, if any, with the Assignment Form annexed hereto duly
executed and with funds sufficient to pay any transfer tax; whereupon the
Company shall, without charge, execute and deliver a new Warrant in the name of
the assignee named in such instrument of assignment and this Warrant shall
promptly be canceled. This Warrant may be divided or combined with other
Warrants which carry the same rights upon presentation hereof at the office of
the Company or at the office of its stock transfer



                                       -2-
<PAGE>


agent, if any, together with a written notice specifying the names and
denominations in which new Warrants are to be issued and signed by the Holder
hereof. The term "Warrant" as used herein includes any warrants issued in
substitution for or replacement of this Warrant, or into which this Warrant may
be divided or exchanged. Upon receipt by the Company of evidence satisfactory to
it of the loss, theft, destruction or mutilation of this Warrant, and (in the
case of loss, theft or destruction) of reasonably satisfactory indemnification,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
will execute and deliver a new Warrant of like tenor and date. Subject to such
right of indemnification, any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at
any time enforceable by anyone.

     (E) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.

     (F) ADJUSTMENT PROVISIONS.

          (1) ADJUSTMENTS OF THE EXERCISE PRICE.

               (A) If the Company subdivides the outstanding Common Shares into
     a greater number of Common Shares, the Exercise Price in effect immediately
     prior to such subdivision shall be proportionately reduced. Conversely, if
     the Company combines its outstanding Common Shares into a lesser number of
     Common Shares, the Exercise Price in effect immediately prior to such
     combination shall be proportionally increased. In case of a subdivision or
     combination, the adjustment of the Exercise Price shall be made as of the
     effective date of the applicable event. A distribution on Common Shares,
     including a distribution of Convertible Securities (as that term is defined
     herein), to shareholders of the Company on a pro rata basis shall be
     considered a subdivision of Common Shares for the purposes of this
     subsection (1)(A), except that the adjustment will be made as of the record
     date for such distribution and any such distribution of Convertible
     Securities shall be deemed to be a distribution of the Common Shares
     underlying such Convertible Securities. As used herein, the term
     "Convertible Securities" shall mean options or warrants or rights for the
     purchase of Common Shares of the Company or for the purchase of any stock
     or other securities convertible into or exchangeable for Common Shares of
     the Company.

               (B) If the Company shall at any time distribute or cause to be
     distributed to its shareholders, on a pro rata basis, cash, assets, or
     securities of any entity other than the Company, then the Exercise Price in
     effect immediately prior to such distribution shall automatically be
     reduced by an amount determined by dividing (x) the amount (if cash) or the
     value (if assets or securities) of the holders' of Warrants (as such term
     is defined in the first paragraph hereof) pro rata share of such
     distribution determined assuming that all holders of Warrants had exercised
     their Warrants on the day prior to such distribution, by (y) the number of
     Common Shares issuable upon the exercise of this Warrant by the Holder on
     the day prior to such distribution.


                                      -3-
<PAGE>


          (2) ADJUSTMENTS OF EXERCISE PRICE - ON ISSUE AT LESS THAN EXERCISE
     PRICE. Excepted from the adjustment for anti-dilution provisions of this
     Section (2) and Section (3) hereof are the Company's issuance of Excluded
     Common Shares (as that term is defined herein), and also all Common Shares
     or Convertible Securities in the form of stock options to the Company's
     employees or non-executive directors, or Common Shares issued to acquire a
     subsidiary or its assets, provided such Common Shares or Convertible
     Securities are issued at prices or with exercise terms equal to the
     Company's then current market price on the date of such issuance.

     If the Company should at any time or from time to time hereafter issue or
     sell any of its Common Shares (other than Common Shares issued upon the
     exercise of Convertible Securities outstanding on November 19, 2002, which
     Common Shares shall be referred to herein as the "Excluded Common Shares")
     without consideration or for a consideration per share less than the
     Exercise Price in effect immediately prior to the time of such issue or
     sale, then forthwith upon such issue or sale, the Exercise Price shall be
     automatically adjusted to a price (computed to the nearest cent) determined
     by dividing (i) the sum of (x) the number of Common Shares outstanding
     immediately prior to such issue or sale multiplied by the Exercise Price in
     effect immediately prior to such issue or sale, by (y) the consideration,
     if any, received by the Company upon such issue or sale, by (ii) the total
     number of Common Shares outstanding immediately after such issue or sale.
     For purposes of this Section (2) and Section (3) hereof, the following
     provisions (A) and (B) shall also be applicable:

               (A) RIGHTS, OPTIONS OR WARRANTS. In case at any time hereafter
     the Company shall in any manner grant any right to subscribe for or to
     purchase, or any option or warrant for the purchase of Common Shares or for
     the purchase of any stock or securities convertible or exchangeable for
     Common Shares (such convertible or exchangeable stock or securities being
     hereinafter referred to as the "Underlying Convertible Securities") and if
     the minimum price per share for which Common Shares are issuable, pursuant
     to such rights, options, warrants or upon conversion or exchange of such
     Underlying Convertible Securities (determined by dividing (i) the total
     amount, if any, received or receivable by the Company as consideration for
     the granting of such rights, options, or warrants plus the minimum
     aggregate amount of additional consideration payable to the Company upon
     the exercise of such rights, options, or warrants under the terms of such
     rights, options, or warrants at the time of making such computation, plus,
     in the case of such Underlying Convertible Securities, the minimum
     aggregate amount of additional consideration, if any, payable upon the
     conversion or exchange thereof under the terms of such Underlying
     Convertible Securities at the time of making such computation, by (ii) the
     total maximum number of Common Shares issuable pursuant to such rights,
     options, or warrants or upon the conversion or exchange of the total
     maximum amount of such Underlying Convertible Securities issuable upon the
     exercise of such rights, options, or warrants or Underlying Convertible
     Securities at the time of making such computation) shall be less than the
     Exercise Price in effect immediately prior to the time of the granting of
     such rights or options, then the total maximum number of Common Shares
     issuable pursuant to such rights, options, warrants or upon conversion or
     exchange of the total maximum amount of such Underlying Convertible
     Securities issuable upon the exercise of such rights, options, or warrants




                                      -4-
<PAGE>


     under the terms of such rights, options, warrants or Underlying Convertible
     Securities at the time of making such computation shall (as of the date of
     granting of such rights, options, or warrants) be deemed to be outstanding
     and to have been issued for said price per share as so determined;
     provided, that no further adjustment of the Exercise Price shall be made
     upon the actual issue of Common Shares so deemed to have been issued unless
     the price per share received by the Company upon the actual issuance of
     Common Shares so deemed to be issued differs from the price per share which
     was last used to adjust the Exercise Price or unless by the terms of such
     rights, options, or warrants or Underlying Convertible Securities the price
     per share which the Company will receive upon any such issuance of Common
     Shares differs from the price per share which was last used to adjust the
     Exercise Price, in either of which events the Exercise Price shall be
     adjusted upon the occurrence of either such event to reflect the new price
     per share of Common Stock; and further provided, that, upon the expiration
     of such rights (including rights to convert or exchange), options or
     warrants (a) the number of shares of Common Stock deemed to have been
     issued and outstanding by reason of the fact that they were issuable
     pursuant to such rights, options, or warrants (including rights to convert
     or exchange) that were not exercised, shall no longer be deemed to be
     issued and outstanding, and (b) the Exercise Price shall forthwith be
     adjusted to the price which would have prevailed had all adjustments been
     made on the basis of the issue only of the Common Shares actually issued
     upon the exercise of such rights, options, or warrants or upon conversion
     or exchange of such Underlying Convertible Securities. Such adjustments
     upon expiration shall have no effect on Warrants exercised prior to such
     expirations.

               (B) CONVERTIBLE SECURITIES. If the Company shall in any manner
     issue or sell any Convertible Securities other than the rights, options, or
     warrants described in this Section (2) or Section (3) hereof and if the
     minimum price per share for which Common Shares are issuable upon
     conversion or exchange of such Convertible Securities (determined by
     dividing (i) the total amount received or receivable by the Company as
     consideration for the issue or sale of such Convertible Securities, plus
     the minimum aggregate amount of additional consideration, if any, payable
     to the Company upon the conversion or exchange thereof under the terms of
     such Convertible Securities at the time of making such computation, by (ii)
     the total maximum number of Common Shares issuable upon the conversion or
     exchange of all such Convertible Securities under the terms of such
     Convertible Securities at the time of making such computation) shall be
     less than the Exercise Price in effect immediately prior to the time of
     such issue or sale, then the total maximum number of Common Shares issuable
     upon conversion or exchange of all such Convertible Securities at the time
     of making such computation shall (as of the date of the issue or sale of
     such Convertible Securities) be deemed to be outstanding and to have been
     issued for said price per share as so determined; provided, that no further
     adjustment of the Exercise Price shall be made upon the actual issue of
     Common Shares so deemed to have been issued unless the price per share
     received by the Company upon the actual issuance of Common Shares so deemed
     to be issued differs from the price per share which was last used to adjust
     the Exercise Price or unless by the terms of such Convertible Securities
     the price per share which the Company will receive upon any such issuance
     of Common Shares differs from the price per share which was last used to
     adjust the Exercise Price, in either of which events the Exercise Price
     shall be



                                      -5-
<PAGE>


     adjusted upon the occurrence of either such event to reflect the new
     price per share of Common Shares; and, further provided that if any such
     issue or sale of such Convertible Securities is made upon exercise of any
     right to subscribe for or to purchase or any option to purchase any such
     Convertible Securities for which an adjustment of the Exercise Price has
     been or is to be made pursuant to the provisions of this Section (2) or
     Section (3) hereof, then no further adjustment of the Exercise Price shall
     be made by reason of such issue or sale unless the price per share received
     by the Company upon the conversion or exchange of such Convertible
     Securities when actually issued differs form the price per share which was
     last used to adjust the Exercise Price or unless by the terms of such
     Convertible Securities the price per share which the Company will receive
     upon any such issuance of Common Shares upon conversion or exchange of such
     Convertible Securities differs from the price per share which was last used
     to adjust the Exercise Price, in either of which events the Exercise Price
     shall be adjusted upon the occurrence of either of such events to reflect
     the new price per share of Common Shares; and, further provided, that, upon
     the termination of the right to convert or to exchange of any such
     Convertible Securities, which were not so converted or exchange, shall no
     longer be deemed to be issued and outstanding, and the Exercise Price shall
     forthwith be adjusted to the price which would have prevailed had all
     adjustments been made on the basis of the issue only of the number of
     Common Shares actually issued upon conversion or exchange of such
     Convertible Securities. Such adjustments upon expiration shall have no
     effect on Warrants exercised prior to such expiration.

          (3) DETERMINATION OF ISSUE PRICE. In case any Common Shares or
     Convertible Securities which shall be issued for cash, the consideration
     received therefor, which shall be the gross sales price for such security
     without deducting therefrom any commission or other expenses paid or
     incurred by the Company for any underwriting of, or otherwise in connection
     with, the issuance thereof, shall be deemed to be the amount received by
     the Company therefor. In case any Common Shares or Convertible Securities
     shall be issued for a consideration part or all of which shall be other
     than cash, then the board of directors of the Company shall determine the
     fair value of such consideration, irrespective of accounting treatment, and
     such Common Shares or Convertible Securities shall be deemed to have been
     issued for an amount of cash equal to the value so determined by the board
     of directors. The reclassification of securities other than Common Shares
     into securities including Common Shares shall be deemed to involve the
     issuance for a consideration other than cash of such Common Shares
     immediately prior to the close of business on the date fixed for the
     determination of security holders entitled to receive such Common Shares.
     In case any Common Shares or Convertible Securities shall be issued
     together with other stock or securities or other assets of the Company for
     consideration, the board of directors of the Company shall determine what
     part of the consideration so received is to be deemed to be consideration
     for the issue of such Common Shares or Convertible Securities.

          (4) DETERMINATION OF DATE OF ISSUE. In case the Company shall take a
     record of the holders of Common Shares for the purpose of entitling them
     (i) to receive a dividend or other distribution payable in Common Shares or
     in Convertible Securities or (ii) to subscribe for or purchase Common
     Shares or Convertible Securities, then such record date shall be deemed to
     be the date of the issue or sale of the Common Shares



                                      -6-
<PAGE>

     deemed to have been issued or sold upon the declaration of such dividend or
     the making of such other distribution or the date of the granting of such
     right of subscription or purchase, as the case may be.

          (5) TREASURY SHARES. For the purpose of this Section (f), Common
     Shares at any relevant time owned or held by, or for the account of, the
     Company shall not be deemed outstanding.

     (G) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be adjusted as
required above, the Company shall forthwith file in the custody of its Secretary
or an Assistant Secretary at its principal office, and with its stock transfer
and warrant agent, if any, an officer's certificate showing the adjusted
Exercise Price determined as herein provided and setting forth in reasonable
detail the facts requiring such adjustment. Each such officer's certificate
shall be made available at all reasonable times for inspection by the Holder and
the Company shall, forthwith after each such adjustment, deliver a copy of such
certificate to the Holder.

     (H) NO ADJUSTMENT FOR SMALL AMOUNTS. Anything in Sections (2) or (3) hereof
to the contrary notwithstanding, the Company shall not be required to give
effect to any adjustment in the Exercise Price unless and until the net effect
of one or more adjustments, determined as above provided, shall have required a
change of the Exercise Price by at least five cents, but when the cumulative net
effect of more than one adjustment so determined shall be to change the actual
Exercise Price by at least five cents, such change in the Exercise Price shall
thereupon be given effect.

     (I) NUMBER OF SHARES ADJUSTED. Upon any adjustment of the Exercise Price,
the Holder of this Warrant shall thereafter (until another such adjustment) be
entitled to purchase, at the new Exercise Price, the number of Common Shares,
calculated to the nearest full share, obtained by multiplying the number of
Common Shares initially issuable upon exercise of this Warrant by the Exercise,
Price specified in the first paragraph hereof and dividing the product so
obtained by the new Exercise Price.

     (J) NOTICES TO HOLDERS. So long as this Warrant shall be outstanding and
unexercised (i) if the Company shall pay any dividend or make/any distribution
upon the Common Shares or (ii) if the Company shall offer to the holders of
Common Shares for subscription or purchase by them any shares of stock of any
class or any other rights or (iii) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then, in any such case, the Company shall
cause to be delivered to the Holder, at least 10 days prior to the date
specified in (x) or (y) below, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which (x) a record is
to be taken for the purpose of such dividend, distribution or rights, or (y)
such reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and the date, if any is
to be fixed, as of which the holders of Common Shares of record shall be
entitled to exchange their Common Shares for securities or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.

                                      -7-
<PAGE>


     (K) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, capital reorganization or other change of outstanding Common
Shares of the Company (other than a change in par value, or from par value to no
par value, or from no par value to par value, or as a result of an issuance of
Common Shares by way of dividend or other distribution or of a subdivision or
combination), or in case of any consolidation or merger of the Company with or
into another corporation (other than a merger with a subsidiary in which merger
the Company is the continuing corporation and which does not result in any
reclassification, capital reorganization or other change of outstanding Common
Shares of the class issuable upon exercise of this Warrant) or in case of any
sale or conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, the Company shall cause effective
provision to be made so that the Holder shall have the right thereafter, by
exercising this Warrant, to purchase the kind and amount of shares of stock and
other securities and property which the Holder would have received upon such
reclassification, capital reorganization or other change, consolidation, merger,
sale or conveyance had this Warrant been exercised prior to the consummation of
such transaction. Any such provision shall include provision for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Warrant. The foregoing provisions of this Section (k) shall
similarly apply to successive reclassifications, capital reorganizations and
changes of Common Shares and to successive consolidations, mergers, sales or
conveyances. In the event the Company spins off a subsidiary by distributing to
the shareholders of the Company as a dividend or otherwise the stock of the
subsidiary, the Company shall reserve for the life of this Warrant, shares of
the subsidiary to be delivered to the holders of the Warrants upon exercise to
the same extent as if they were owners of record of the Warrant Shares on the
record date for payment of the shares of the subsidiary.

     (L) REGISTRATION UNDER THE SECURITIES ACT OF 1933. As more fully described
in that certain Subscription Agreement dated as of the date hereof by and among
the parties hereto (the "Subscription Agreement"), the Company agrees with the
Holder that the Company shall (subject to its acceptance of the Subscription
Agreement), on behalf of the Holder, (1) under Section 6 of the Act include the
Common Shares in a registration statement on Form S-3 (Registration No.
333-83040, hereinafter referred to as the "Registration Statement") with (and
use its best efforts to cause such registration statement to be declared
effective as promptly as practicable by) the SEC, to permit offers and sales
involving a public offering (as such term is interpreted by the SEC) under
Section 5 of the Act by the Subscriber of the Common Shares; provided, however,
that if Form S-3 becomes unavailable at any time that a pre-effective amendment
is required to be filed to the Registration Statement, then the Company shall
file a registration statement on such form is then available to effect a
registration of the Common Shares, subject to the consent of the Holder, which
consent will not be unreasonably withheld; and (2) qualify such offers and sales
of the Common Shares under the securities laws of the state of residence of the
Holder. The Company shall maintain the effectiveness of the registration
statement on which the Common Shares are registered, and the current and
complete status of the related prospectus, at its sole expense, until all Common
Shares have been sold.

     (M) NOTICES. All notices required to be given to any of the parties
hereunder shall be in writing and shall be deemed to have been sufficiently
given for all purposes when presented personally to such party or sent by
certified or registered mail, return receipt requested, to such party at its
address set forth below:

                                    -8-
<PAGE>


     If to the Company:      U.S. Energy Corp.
                             877 North 8th West
                             Riverton, Wyoming 82501
                             Attn: Keith Larsen
                             Fax: 303-808-5445

     With a copy to:         The Law Offices of Stephen E. Rounds
                             4635 East 18th Avenue
                             Denver, Colorado 80220
                             Attn: Stephen E. Rounds, Esq.
                             Fax: 303-377-0231

     If to the Subscriber:   Tsunami Partners, L.P.
                             2011 Cedar Springs Road
                             Apt. 506
                             Dallas, TX 75201
                             Attn:  Insue Kim

     With copies to:         Pepper Hamilton LLP
                             3000 Two Logan Square
                             18th & Arch Streets
                             Philadelphia, Pennsylvania 19103
                             Attn:  Robert A. Friedel, Esq.
                             Fax: 215-981-4750

          Such notice shall be deemed to be given when received if delivered
personally or five (5) business days after the date mailed. Any notice mailed
shall be sent by certified or registered mail. Any notice of any change in such
address shall also be given in the manner set forth above. Whenever the giving
of notice is required, the giving of such notice may be waived in writing by the
party entitled to receive such notice.

     (N) TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933. The Company may
cause the following legend, or one similar thereto, to be set forth on the
Warrants and on each certificate representing Warrant Shares or any other
security issued or issuable upon exercise of this Warrant not theretofore
distributed to the public or sold to underwriters for distribution to the
public, unless legal counsel for the Company is of the opinion as to any such
certificate that such legend, or one similar thereto, is unnecessary:

     "THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN
     REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
     "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD
     OR TRANSFERRED OR OFFERED FOR SALE OR TRANSFER UNLESS A REGISTRATION
     STATEMENT UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES
     LAWS WITH RESPECT TO SUCH SECURITIES IS THEN IN EFFECT, OR IN AN
     OPINION OF COUNSEL OF THE REGISTERED OWNER AND ADDRESSED TO THE ISSUER
     AND IN FORM AND SUBSTANCE



                                    -9-
<PAGE>

     SATISFACTORY TO THE ISSUER, SUCH REGISTRATION UNDER THE SECURITIES
     ACT AND OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED."

     (O) APPLICABLE LAW. This Warrant shall be governed by, and construed in
accordance with, the laws of the State of Wyoming.

          IN WITNESS WHEREOF, the Company and Holder have caused this
Warrant to be executed by its officer thereunto duly authorized.

Dated:  November 19, 2002.

                                            U.S. ENERGY CORP.


                                            By:    /s/  Keith G. Larsen
                                                --------------------------------
                                            Name:  Keith G. Larsen
                                            Title:  President


                                            TSUNAMI PARTNERS, L.P.


                                            By:  /s/  Insue Kim
                                                --------------------------------
                                            Name: Insue Kim
                                            Title:  General Partner



                                   -10-
<PAGE>


                               PURCHASE FORM

                                                           Dated:_______________

The undersigned hereby irrevocably elects to exercise the Warrant to the extent
of purchasing __________________ shares of Common Stock and hereby makes payment
of $___________________ in payment of the actual exercise price thereof.

                   INSTRUCTIONS FOR REGISTRATION OF STOCK

Name:___________________________________________________________________________
                (Please typewrite or print in block letters)

Address:________________________________________________________________________

Signature:______________________________________________________________________

                              ASSIGNMENT FORM

                                                           Dated:_______________

         FOR VALUE RECEIVED, ___________________________________________________

hereby sells, assigns and transfers unto _______________________________________


             (Name: Please typewrite or print in block letters)

Address:________________________________________________________________________

the right to purchase Common Stock represented by this Warrant to the extent of
_______________ shares as to which such right is exercisable and does hereby
irrevocably constitute and appoint


attorney, to transfer the same on the books of the Company with full power of

substitution in the premises.


                                            Signature:__________________________



                                   -11-
<PAGE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.24
<SEQUENCE>5
<FILENAME>ex4-24s3initial_filing.txt
<DESCRIPTION>ROBERT NICHOLAS STOCK OPTION
<TEXT>
                                                                    EXHIBIT 4.24

                             U. S. ENERGY CORP.

                           STOCK OPTION AGREEMENT


This stock option agreement is made by and between U. S. ENERGY CORP.
(herein referred to as the "Company") and ROBERT A. NICHOLAS (hereinafter
referred to as the "Optionee").

1.   The Company hereby grants to the Optionee an option to purchase an
     aggregate of 18,000 shares of the common stock of the Company, $0.01
     par value (hereinafter referred to as the "Shares") at an option price
     of $3.00 per share. The Shares shall become available for exercise
     FEBRUARY 3, 2003.

2.   This option, to the extent not exercised, shall expire on FEBRUARY 2,
     2004, or earlier upon the death of the Optionee.

3.   The Optionee may exercise this option at any time, or from time to
     time, as to all or any part of the Shares by giving written notice to
     the Company, at its principal office, specifying the number of Shares
     to which the exercise shall apply, and accompanied by payment of the
     full purchase price for the Shares being purchased. Optionee shall
     also execute an investment representation statement in a form approved
     by the board of directors of the company prior to issuance of share
     certificates. Upon compliance with the terms of this Agreement,
     certicate(s) representing the Shares purchased shall be issued as soon
     as practicable after notice of exercise is given to the Company.

4.   This option is not transferable by the Optionee and is exercisable
     only by him.

5.   In the event of Optionee's death prior to the complete exercise of the
     option, any remaining portion of the option may be exercised in whole
     or in part after the date of the Optionee's death, but only by the
     Optionee's estate or by or on behalf of the person(s) to whom the
     Optionee's rights pass under his will or the laws of descent and
     distribution. To the extent not exercised, the option shall terminate
     sixty (60) days after Optionee's death. If the Optionee is not a
     natural person, to the extent not exercised, the option shall
     terminate immediately upon Optionee's dissolution, liquidation or
     legal termination.

6.   The Optionee hereby represents that the option granted hereunder and the
     Shares purchased by him pursuant to the exercise of all or any part of the
     option are and will be acquired by him for investment and not with a view
     to the distribution thereof. The option is granted by the Company in
     reliance upon this representation. Upon the exercise of the option,
     Optionee shall not thereafter transfer, encumber or dispose of the Shares
     so purchased unless: (a) an effective registration statement covering such
     Shares is filed pursuant to the Securities Act of 1933, as amended, and
     applicable state law; or (b) an opinion letter of the Optionee's counsel is
     obtained, satisfactory to the Company and its counsel, that such transfer
     is not in violation of any applicable federal or state securities laws or
     regulations.


<PAGE>


Stock Option Agreement
Robert A. Nicholas
Page 2



IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by its duly authorized officer and to be sealed with its
corporate seal, attested by its secretary, and Optionee has executed this
Agreement with the intent to be legally bound as of the date written below.


                                            U. S. ENERGY CORP.



Attest:   /s/  Daniel P. Svilar             By:  /s/  Keith G. Larsen
        -------------------------------         --------------------------------
         Daniel P. Svilar,                      Keith G. Larsen,
         Secretary                                       President


                                            OPTIONEE:



Dated:            2/11/03                     /s/  Robert A. Nicholas
        -------------------------------     ------------------------------------


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.25
<SEQUENCE>6
<FILENAME>ex4-25s3initial_filing.txt
<DESCRIPTION>YSFC/USE EXHANGE WARRANT & AMND.
<TEXT>
                                                                   EXHIBIT  4.25

SA-1-YS
SA/CS
                                                             FORM DATE: 9/1/1999

           VOID AFTER 3:30 P.M., MOUNTAIN TIME, ON SEPTEMBER 19, 2002

                        WARRANT TO PURCHASE COMMON SHARES

                                U.S. ENERGY CORP.

     This is to Certify That, FOR VALUE RECEIVED, [FIRST NAME] [LAST NAME],
[Address1], [City], [State] [PostalCode] ("Holder"), is entitled to purchase,
subject to the provisions of this Warrant, from U.S. ENERGY CORP. ("Company"), a
Wyoming corporation, at any time until 3:30 P.M., Mountain Time, on September
19, 2002 ("Expiration Date"), [No. of Shares] Common Shares of the Company at a
purchase price per share of $3.64 during thE period this Warrant is exercisable.
The number of Common Shares to be received upon the exercise of this Warrant and
the price to be paid for a Common Share may be adjusted from time to time as
hereinafter set forth. The purchase price of a Common Share in effect at any
time and as adjusted from time to time is hereinafter sometimes referred to as
the "Exercise Price." This Warrant is or may be one of a series of warrants
identical in form issued by the Company to purchase an aggregate of 67,025
Common Shares of the Company and the term "Warrants" as used herein means all
such Warrants (including this Warrant). The Common Shares, as adjusted from time
to time, underlying the Warrants are hereinafter sometimes referred to as
"Warrant Shares" and include all Common Shares that have been issued upon the
exercise of the Warrants and all unissued Common Shares underlying the Warrants.

     (A) EXERCISE OF WARRANT. This Warrant may be exercised in whole or in part
at any time or from time to time until the Expiration Date or if the Expiration
Date is a day on which banking institutions are authorized by law to close, then
on the next succeeding day which shall not be such a day, by presentation and
surrender hereof to the Company or at the office of its stock transfer agent, if
any, with the Purchase Form annexed hereto duly executed and accompanied by
payment of the Exercise Price for the number of shares specified in such Form,
together with all federal and state taxes applicable upon such exercise. The
Company agrees not to merge, reorganize or take any action that would terminate
this Warrant unless provisions are made as part of such merger, reorganization
or other action which would provide the holders of this Warrant with an
equivalent of this Warrant as specified in Section (i) hereof. The Company
agrees to provide notice to the Holder that any tender offer is being made for
the Company's Common Shares no later than three business days after the day the
Company becomes aware that any tender offer is being made for outstanding Common
Shares of the Company. If this Warrant should be exercised in part only, the
Company shall, upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the right of the Holder to purchase the balance
of the Common Shares purchasable hereunder. Upon receipt by the Company of this
Warrant at the office of the Company or at the office of the Company's stock
transfer agent, in proper form for exercise and accompanied by the Exercise
Price, the Holder shall be deemed to be the holder of record of the Common
Shares issuable upon such


<PAGE>

U.S. Energy Corp.
Warrant to Purchase Common Shares
Page 2


exercise, notwithstanding that the stock transfer books of the Company shall
then be closed or that certificates representing such Common Shares shall not
then be actually delivered to the Holder.

     (B) RESERVATION OF SHARES. The Company hereby agrees that at all times
there shall be reserved for issuance and/or delivery upon exercise of this
Warrant such number of Common Shares as shall be required for issuance or
delivery upon exercise of this Warrant.

     (C) FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a Common Share called for upon any exercise hereof,
the Company shall, upon receipt by the Company or the Company's stock transfer
agent of the Exercise Price on such fractional share, pay to the Holder an
amount in cash equal to such fraction multiplied by the current market value of
such fractional share, determined as follows:

          (1) If the Common Shares are listed on a national securities exchange
     or a foreign exchange, are admitted to unlisted trading privileges on such
     an exchange, or are listed for trading on a trading system of the National
     Association of Securities Dealers, Inc. ("NASD") such as Regular NASDAQ
     ("NASDAQ") or NASDAQ/NMS ("NMS") or the OTC Bulletin Board, then the
     current value shall be the last reported sale price of the Common Shares on
     such an exchange or system on the last business day prior to the date of
     exercise of this Warrant or if no such sale is made on such day, the
     average of the closing bid prices for the Common Shares for such day on
     such exchange or such system shall be used; or

          (2) If the Common Shares are not so listed on such exchange or system
     or admitted to unlisted trading privileges, the current value shall be the
     average of the last reported bid prices reported by the National Quotation
     Bureau, Inc. on the last business day prior to the date of the exercise of
     this Warrant; or

          (3) If the Common Shares are not so listed or admitted to unlisted
     trading privileges and if bid prices are not so reported, the current value
     shall be an amount, not less than book value, determined in such reasonable
     manner as may be prescribed by the board of directors of the Company.

     (D) EXCHANGE, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and surrender
hereof to the Company or at the office of its stock transfer agent, if any, for
other Warrants of different denominations entitling the Holder thereof to
purchase (under the same terms and conditions as provided by this Warrant) in
the aggregate the same number of Common Shares purchasable hereunder. This
Warrant may not be sold, transferred, assigned, or hypothecated except in
compliance with federal and state securities laws. Any transfer or assignment
shall be made by surrender of this Warrant to the Company or at the office of
its stock transfer agent, if any, with the Assignment Form annexed hereto duly
executed

<PAGE>

U.S. Energy Corp.
Warrant to Purchase Common Shares
Page 3


and with funds sufficient to pay any transfer tax; whereupon the Company shall,
without charge, execute and deliver a new Warrant in the name of the assignee
named in such instrument of assignment and this Warrant shall promptly be
canceled. This Warrant may be divided or combined with other Warrants which
carry the same rights upon presentation hereof at the office of the Company or
at the office of its stock transfer agent, if any, together with a written
notice specifying the names and denominations in which new Warrants are to be
issued and signed by the Holder hereof. The term "Warrant" as used herein
includes any warrants issued in substitution for or replacement of this Warrant,
or into which this Warrant may be divided or exchanged. Upon receipt by the
Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will execute and deliver a new Warrant
of like tenor and date. Subject to such right of indemnification, any such new
Warrant executed and delivered shall constitute an additional contractual
obligation on the part of the Company, whether or not this Warrant so lost,
stolen, destroyed, or mutilated shall be at any time enforceable by anyone.

     (E) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.

     (F) ADJUSTMENT PROVISIONS.

          (1) Adjustments of the Exercise Price.

               (A) If the Company subdivides its outstanding Common Shares into
          a greater number of Common Shares, the Exercise Price in effect
          immediately prior to such subdivision shall be proportionately
          reduced. Conversely, if the Company combines its outstanding Common
          Shares into a lesser number of Common Shares, the Exercise Price in
          effect immediately prior to such combination shall be proportionally
          increased. In case of a subdivision or combination, the adjustment of
          the Exercise Price shall be made as of the effective date of the
          applicable event. A distribution on Common Shares, including a
          distribution of Convertible Securities, to shareholders of the Company
          on a pro rata basis shall be considered a subdivision of Common Shares
          for the purposes of this subsection (1)(A) of this Section, except
          that the adjustment will be made as of the record date for such
          distribution and any such distribution of Convertible Securities shall
          be deemed to be a distribution of the Common Shares underlying such
          Convertible Securities.

               (B) If the Company shall at any time distribute or cause to be
          distributed to its shareholders, on a pro rata basis, cash, assets, or
          securities of any entity other than the Company, then the Exercise
          Price in effect immediately prior to such

<PAGE>


U.S. Energy Corp.
Warrant to Purchase Common Shares
Page 4

          distribution shall automatically be reduced by an amount determined by
          dividing (x) the amount (if cash) or the value (if assets or
          securities) of the holders' of Warrants (as such term is defined in
          the first paragraph hereof) pro rata share of such distribution
          determined assuming that all holders of Warrants had exercised their
          Warrants on the day prior to such distribution, by (y) the number of
          Common Shares issuable upon the exercise of Warrants (as such term is
          defined in the first paragraph hereof) by the holders thereof on the
          day prior to such distribution.

               (3) No Adjustment for Small Amounts. Anything in this Section (f)
          to the contrary notwithstanding, the Company shall not be required to
          give effect to any adjustment in the Exercise Price unless and until
          the net effect of one or more adjustments, determined as above
          provided, shall have required a change of the Exercise Price by at
          least one cent, but when the cumulative net effect of more than one
          adjustment so determined shall be to change the actual Exercise Price
          by at least one cent, such change in the Exercise Price shall
          thereupon be given effect.

               (4) Number of Shares Adjusted. Upon any adjustment of the
          Exercise Price, the Holder of this Warrant shall thereafter (until
          another such adjustment) be entitled to purchase, at the new Exercise
          Price, the number of Common Shares, calculated to the nearest full
          share, obtained by multiplying the number of Common Shares initially
          issuable upon exercise of this Warrant by the Exercise Price specified
          in the first paragraph hereof and dividing the product so obtained by
          the new Exercise Price.

               (5) Definitions.

                    (A) Whenever reference is made in this Section (f) to the
               distribution of Common Shares, the term "Common Shares" shall
               mean the Common Shares of the Company authorized as of the date
               hereof and any other class of stock ranking on a parity with such
               Common Shares. However, subject to the provisions of Section (i)
               hereof, Common Shares issuable upon exercise hereof shall include
               only Common Shares of the class designated as Common Shares of
               the Company as of the date hereof.

                    (B) Whenever reference is made in this Section (f) to the
               distribution of Convertible Securities, the term "Convertible
               Securities" shall mean options or warrants or rights for the
               purchase of Common Shares of the Company or for the purchase of
               any stock or other securities convertible into or exchangeable
               for Common Shares of the Company.

               (6) AntiDilution Provisions.

<PAGE>


U.S. Energy Corp.
Warrant to Purchase Common Shares
Page 5


                    (A) Adjustments of Exercise Price. If the Company should at
               any time or from time to time hereafter issue or sell any of its
               Common Shares (other than Common Shares issued upon the exercise
               of Convertible Securities outstanding on March 5, 1999, which
               Common Shares shall be referred to herein as the "Excluded Common
               Shares") without consideration or for a consideration per share
               less than the Exercise Price in effect immediately prior to the
               time of such issue or sale, then forthwith upon such issue or
               sale, the Exercise Price shall be automatically adjusted to a
               price (computed to the nearest cent) determined by dividing (i)
               the sum of (x) the number of Common Shares outstanding
               immediately prior to such issue or sale multiplied by the
               Exercise Price in effect immediately prior to such issue or sale,
               and (y) the consideration, if any, received by the Company upon
               such issue or sale, by (ii) the total number of Common Shares
               outstanding immediately after such issue or sale. For purposes of
               this Section (6)(A), the following provisions (i) and (ii) shall
               also be applicable:

                         (i) Rights, Options, or Warrants. In case at any time
                    hereafter the Company shall in any manner grant any right to
                    subscribe for or to purchase, or any option or warrant for
                    the purchase of Common Shares or for the purchase of any
                    stock or securities convertible into or exchangeable for
                    Common Shares (such convertible or exchangeable stock or
                    securities being hereinafter referred to as the "Underlying
                    Convertible Securities") and if the minimum price per share
                    for which Common Shares are issuable, pursuant to such
                    rights, options, warrants or upon conversion or exchange of
                    such Underlying Convertible Securities (determined by
                    dividing (i) the total amount, if any, received or
                    receivable by the Company as consideration for the granting
                    of such rights, options, or warrants plus the minimum
                    aggregate amount of additional consideration payable to the
                    Company upon the exercise of such rights, options, or
                    warrants under the terms of such rights, options, or
                    warrants at the time of making such computation, plus, in
                    the case of such Underlying Convertible Securities, the
                    minimum aggregate amount of additional consideration, if
                    any, payable upon the conversion or exchange thereof under
                    the terms of such Underlying Convertible Securities at the
                    time of making such computation, by (ii) the total maximum
                    number of Common Shares issuable pursuant to such rights,
                    options, or warrants or upon the conversion or exchange of
                    the total maximum amount of such Underlying Convertible
                    Securities issuable upon the exercise of such rights,
                    options, or warrants under the terms of such rights,
                    options, warrants or Underlying Convertible Securities at
                    the time of making such computation) shall be less than the
                    Exercise Price in effect immediately prior to the time of
                    the granting of such rights or options, then the total
                    maximum number of Common Shares issuable pursuant to such
                    rights, options, warrants or upon conversion or exchange of
                    the total maximum amount of such Underlying Convertible

<PAGE>


U.S. Energy Corp.
Warrant to Purchase Common Shares
Page 6

                    Securities issuable upon the exercise of such rights,
                    options, or warrants under the terms of such rights,
                    options, warrants or Underlying Convertible Securities at
                    the time of making such computation shall (as of the date of
                    granting of such rights, options, or warrants) be deemed to
                    be outstanding and to have been issued for said price per
                    share as so determined; provided, that no further adjustment
                    of the Exercise Price shall be made upon the actual issue of
                    Common Shares so deemed to have been issued unless the price
                    per share received by the Company upon the actual issuance
                    of Common Shares so deemed to be issued differs from the
                    price per share which was last used to adjust the Exercise
                    Price or unless by the terms of such rights, options or
                    warrants or Underlying Convertible Securities the price per
                    share which the Company will receive upon any such issuance
                    of Common Shares differs from the price per share which was
                    last used to adjust the Exercise Price, in either of which
                    events the Exercise Price shall be adjusted upon the
                    occurrence of either such event to reflect the new price per
                    share of Common Stock; and further provided, that, upon the
                    expiration of such rights (including rights to convert or
                    exchange), options or warrants (a) the number of shares of
                    Common Stock deemed to have been issued and outstanding by
                    reason of the fact that they were issuable pursuant to such
                    rights, options, or warrants (including rights to convert or
                    exchange) that were not exercised, shall no longer be deemed
                    to be issued and outstanding, and (b) the Exercise Price
                    shall forthwith be adjusted to the price which would have
                    prevailed had all adjustments been made on the basis of the
                    issue only of the Common Shares actually issued upon the
                    exercise of such rights, options, or warrants or upon
                    conversion or exchange of such Underlying Convertible
                    Securities. Such adjustments upon expiration shall have no
                    effect on Warrants exercised prior to such expiration.

                         (ii) Convertible Securities. If the Company shall in
                    any manner issue or sell any Convertible Securities other
                    than the rights, options, or warrants described in Section
                    6(A)(i) hereof and if the minimum price per share for which
                    Common Shares are issuable upon conversion or exchange of
                    such Convertible Securities (determined by dividing (i) the
                    total amount received or receivable by the Company as
                    consideration for the issue or sale of such Convertible
                    Securities, plus the minimum aggregate amount of additional
                    consideration, if any, payable to the Company upon the
                    conversion or exchange thereof under the terms of such
                    Convertible Securities at the time of making such
                    computation, by (ii) the total maximum number of Common
                    Shares issuable upon the conversion or exchange of all such
                    Convertible Securities under the terms of such Convertible
                    Securities at the time of making such computation) shall be
                    less than the Exercise Price in effect immediately prior to
                    the time of such issue or sale, then the total maximum

<PAGE>


U.S. Energy Corp.
Warrant to Purchase Common Shares
Page 7

                    number of Common Shares issuable upon conversion or exchange
                    of all such Convertible Securities at the time of making
                    such computation shall (as of the date of the issue or sale
                    of such Convertible Securities) be deemed to be outstanding
                    and to have been issued for said price per share as so
                    determined; provided, that no further adjustment of the
                    Exercise Price shall be made upon the actual issue of Common
                    Shares so deemed to have been issued unless the price per
                    share received by the Company upon the actual issuance of
                    Common Shares so deemed to be issued differs from the price
                    per share which was last used to adjust the Exercise Price
                    or unless by the terms of such Convertible Securities the
                    price per share which the Company will receive upon any such
                    issuance of Common Shares differs from the price per share
                    which was last used to adjust the Exercise Price, in either
                    of which events the Exercise Price shall be adjusted upon
                    the occurrence of either such event to reflect the new price
                    per share of Common Shares; and, further provided that if
                    any such issue or sale of such Convertible Securities is
                    made upon exercise of any right to subscribe for or to
                    purchase or any option to purchase any such Convertible
                    Securities for which an adjustment of the Exercise Price has
                    been or is to be made pursuant to the provisions of Section
                    6(A)(i) then no further adjustment of the Exercise Price
                    shall be made by reason of such issue or sale unless the
                    price per share received by the Company upon the conversion
                    or exchange of such Convertible Securities when actually
                    issued differs from the price per share which was last used
                    to adjust the Exercise Price or unless by the terms of such
                    Convertible Securities the price per share which the Company
                    will receive upon any such issuance of Common Shares upon
                    conversion or exchange of such Convertible Securities
                    differs from the price per share which was last used to
                    adjust the Exercise Price, in either of which events the
                    Exercise Price shall be adjusted upon the occurrence of
                    either of such events to reflect the new price per share of
                    Common Shares; and, further provided, that, upon the
                    termination of the right to convert or to exchange such
                    Convertible Securities for Common Shares, (a) the number of
                    Common Shares deemed to have been issued and outstanding by
                    reason of the fact that they were issuable upon conversion
                    or exchange of any such Convertible Securities, which were
                    not so converted or exchanged, shall no longer be deemed to
                    be issued and outstanding, and (b) the Exercise Price shall
                    forthwith be adjusted to the price which would have
                    prevailed had all adjustments been made on the basis of the
                    issue only of the number of Common Shares actually issued
                    upon conversion or exchange of such Convertible Securities.
                    Such adjustments upon expiration shall have no effect on
                    Warrants exercised prior to such expiration.

                    (B) Determination of Issue Price. In case any Common Shares
               or Convertible Securities shall be issued for cash, the
               consideration received therefor,


<PAGE>


U.S. Energy Corp.
Warrant to Purchase Common Shares
Page 8

               which shall be the gross sales price for such security without
               deducting therefrom any commission or other expenses paid or
               incurred by the Company for any underwriting of, or otherwise in
               connection with, the issuance thereof, shall be deemed to be the
               amount received by the Company therefor. In case any Common
               Shares or Convertible Securities shall be issued for a
               consideration part or all of which shall be other than cash,
               then, for the purpose of this Section (6), the Board of Directors
               of the Company shall determine the fair value of such
               consideration, irrespective of accounting treatment, and such
               Common Shares or Convertible Securities shall be deemed to have
               been issued for an amount of cash equal to the value so
               determined by the Board of Directors. The reclassification of
               securities other than Common Shares into securities including
               Common Shares shall be deemed to involve the issuance for a
               consideration other than cash of such Common Shares immediately
               prior to the close of business on the date fixed for the
               determination of security holders entitled to receive such Common
               Shares. In case any Common Shares or Convertible Securities shall
               be issued together with other stock or securities or other assets
               of the Company for consideration, the Board of Directors of the
               Company shall determine what part of the consideration so
               received is to be deemed to be consideration for the issue of
               such Common Shares or Convertible Securities.

                    (C) Determination of Date of Issue. In case the Company
               shall take a record of the holders of Common Shares for the
               purpose of entitling them (i) to receive a dividend or other
               distribution payable in Common Shares or in Convertible
               Securities or (ii) to subscribe for or purchase Common Shares or
               Convertible Securities, then such record date shall be deemed to
               be the date of the issue or sale of the Common Shares deemed to
               have been issued or sold upon the declaration of such dividend or
               the making of such other distribution or the date of the granting
               of such right of subscription or purchase, as the case may be.

                    (D) Treasury Shares. For the purpose of this Section (f),
               Common Shares at any relevant time owned or held by, or for the
               account of, the Company shall not be deemed outstanding.

     (G) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be adjusted as
required by the provisions of Section (f) hereof, the Company shall forthwith
file in the custody of its Secretary or an Assistant Secretary at its principal
office, and with its stock transfer and warrant agent, if any, an officer's
certificate showing the adjusted Exercise Price determined as herein provided
and setting forth in reasonable detail the facts requiring such adjustment. Each
such officer's certificate shall be made available at all reasonable times for
inspection by the Holder and the Company shall, forthwith after each such
adjustment, deliver a copy of such certificate to the Holder. In the event the
Company does not comply with the provisions of this Section (g), each Holder
shall be entitled to demand and receive a payment from the Company in the amount
of $1,000 for each violation of this Section (g)


<PAGE>


U.S. Energy Corp.
Warrant to Purchase Common Shares
Page 9

by the Company. The Company agrees to pay such amount and to pay all of the
costs and expenses incurred by the Holder, including attorney fees, in
recovering such amount from the Company.

     (H) NOTICES TO HOLDERS. So long as this Warrant shall be outstanding and
unexercised (i) if the Company shall pay any dividend or make any distribution
upon the Common Shares or (ii) if the Company shall offer to the holders of
Common Shares for subscription or purchase by them any shares of stock of any
class or any other rights or (iii) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then, in any such case, the Company shall
cause to be delivered to the Holder, at least 10 days prior to the date
specified in (x) or (y) below, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which (x) a record is
to be taken for the purpose of such dividend, distribution or rights, or (y)
such reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and the date, if any is
to be fixed, as of which the holders of Common Shares of record shall be
entitled to exchange their Common Shares for securities or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.

     (I) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, capital reorganization or other change of outstanding Common
Shares of the Company (other than a change in par value, or from par value to no
par value, or from no par value to par value, or as a result of an issuance of
Common Shares by way of dividend or other distribution or of a subdivision or
combination), or in case of any consolidation or merger of the Company with or
into another corporation (other than a merger with a subsidiary in which merger
the Company is the continuing corporation and which does not result in any
reclassification, capital reorganization or other change of outstanding Common
Shares of the class issuable upon exercise of this Warrant) or in case of any
sale or conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, the Company shall cause effective
provision to be made so that the Holder shall have the right thereafter, by
exercising this Warrant, to purchase the kind and amount of shares of stock and
other securities and property which the Holder would have received upon such
reclassification, capital reorganization or other change, consolidation, merger,
sale or conveyance had this Warrant been exercised prior to the consummation of
such transaction. Any such provision shall include provision for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Warrant. The foregoing provisions of this Section (i) shall
similarly apply to successive reclassifications, capital reorganizations and
changes of Common Shares and to successive consolidations, mergers, sales or
conveyances. In the event the Company spins off a subsidiary by distributing to
the shareholders of the Company as a dividend or otherwise the stock of the
subsidiary, the Company shall reserve for the life of this Warrant, shares of
the subsidiary to be delivered to the Holders of the Warrants upon exercise to
the same extent as if they

<PAGE>


U.S. Energy Corp.
Warrant to Purchase Common Shares
Page 10

were owners of record of the Warrant Shares on the record date for distribution
of the shares of the subsidiary.

     (J) REGISTRATION UNDER THE SECURITIES ACT OF 1933.

          (1) Within 45 days after receipt of a written request by the then
     Holder(s) of Warrants or Warrant Shares representing at least 51% of the
     total Warrant Shares made at any time within the period commencing
     September 20, 1998, and ending September 19, 2003, the Company will file,
     no more than once, a registration statement under the Securities Act of
     1933, as amended, registering the Warrants and the Warrant Shares. The
     Company will use its best efforts to cause such registration statement to
     become effective.

          (2) In addition, if at any time during the period commencing September
     20, 1998, and ending December 31, 2004, the Company should file a
     registration statement (which term shall not include any registration
     statement filed on Forms S-8 or S-4) under the Securities Act of 1933, as
     amended (the "Act"), which relates to a current offering of securities of
     the Company (except in connection with an offering (i) to employees or (ii)
     of the Company's securities solely in exchange for properties, assets or
     stock of other individuals or corporations), such registration statement
     and the prospectus included therein shall also, at the written request to
     the Company by any of the Holder(s) of the Warrants and Warrant Shares,
     relate to, and meet the requirements of the Act with respect to any public
     offering of the Warrants and Warrant Shares so as to permit the public sale
     thereof in compliance with the Act. The Company shall give written notice
     to the Holder(s) of its intention to file a registration statement under
     the Act relating to a current offering of the aforesaid securities of the
     Company 30 or more days prior to the filing of such registration statement,
     and the written request provided for in the first sentence of this
     subsection shall be made by the Holder(s) 10 or more days prior to the date
     specified in the notice as the date on which it is intended to file such
     registration statement. Neither the delivery of such notice by the Company
     nor of such request by the Holder(s) shall in any way obligate the Company
     to file such registration statement and notwithstanding the filing of such
     registration statement, the Company may, at any time prior to the effective
     date thereof, determine not to proceed to effectiveness with such
     registration statement, without liability to the Holder(s).

          (3) In addition, the Company will cooperate with the then Holder(s) of
     the Warrants and Warrant Shares in preparing and signing any registration
     statement, in addition to the registration statements discussed above,
     required in order to sell or transfer the Warrants and Warrant Shares and
     will sign and supply all information required therefor, but such additional
     registration shall be at the then Holder(s) cost and expense.

                  (4) When, pursuant to subsections (1), (2), or (3) of this
         Section, the Company shall take any action to permit a public offering
         or sale or other distribution of the Warrants and Warrant Shares, the
         Company shall:
<PAGE>


U.S. Energy Corp.
Warrant to Purchase Common Shares
Page 11

               (A) Supply to each selling Holder two executed copies of each
          registration statement and a reasonable number of copies of the
          preliminary, final and other prospectus in conformity with
          requirements of the Act and the Rules and Regulations promulgated
          thereunder and such other documents as the Holders shall reasonably
          request.

               (B) The Company shall bear the complete cost and expense (other
          than any selling commissions relating to the sale of the Warrants and
          Warrant Shares, which shall be paid by the sellers thereof) of such
          registrations or qualifications except those filed under subsection
          (j)(3) which shall be at the Holder(s) cost and expense.

               (C) Keep effective such registration statement until the first of
          the following events occur: (i) 36 months have elapsed after the
          effective date of such registration statement or (ii) all of the
          registered Warrant Shares issued by the Company either before or after
          the effective date of such registration statement have been publicly
          sold under such registration statement.

               (D) Indemnify and hold harmless each such Holder and each
          underwriter, within the meaning of the Act, who may purchase from or
          sell for any such Holder, any Warrants or Warrant Shares, from and
          against any and all losses, claims, damages, and liabilities
          (including but not limited to, any and all expenses whatsoever
          reasonably incurred in investigating, preparing, defending or settling
          any claim) arising from (i) any untrue or alleged untrue statement of
          a material fact contained in any registration statement furnished
          pursuant to clause (A) of this subsection, or any prospectus included
          therein or (ii) any omission or alleged omission to state therein a
          material fact required to be stated therein or necessary to make the
          statements therein not misleading (unless such untrue statement or
          omission or such alleged untrue statement or omission was based upon
          information furnished or required to be furnished in writing to the
          Company by such Holder or underwriter expressly for use therein),
          which indemnification shall include each person, if any, who controls
          any such Holder or underwriter within the meaning of the Act;
          provided, however, that the Company shall not be so obligated to
          indemnify any such Holder or underwriter or controlling person unless
          such Holder and underwriter shall at the same time indemnify the
          Company, its directors, each officer signing any registration
          statement or any amendment to any registration statement and each
          person, if any, who controls the Company within the meaning of the
          Act, from and against any and all losses, claims, damages and
          liabilities (including, but not limited to, any and all expenses
          whatsoever reasonably incurred in investigating, preparing, defending
          or settling any claim) arising from (i) any untrue or alleged untrue
          statement of a material fact contained in any registration statement
          or prospectus furnished pursuant to Clause (A) of this subsection, or
          (ii) any omission or


<PAGE>


U.S. Energy Corp.
Warrant to Purchase Common Shares
Page 12

          alleged omission to state therein a material fact required to be
          stated therein or necessary to make the statements therein not
          misleading, but the indemnity of such Holder, underwriter or
          controlling person shall be limited to liability based upon
          information furnished, or required to be furnished, in writing to the
          Company by such Holder or underwriter or controlling person expressly
          for use therein. The Company shall not be liable for amounts paid in
          settlement of any such litigation if such settlement was effected
          without the consent of the Company. The indemnity agreement of the
          Company herein shall not inure to the benefit of any such underwriter
          (or to the benefit of any person who controls such underwriter) on
          account of any losses, claims, damages, liabilities (or actions or
          proceedings in respect thereof) arising from the sale of any of such
          Warrants or Warrant Shares by such underwriter to a person if such
          underwriter failed to send or give a copy of the prospectus furnished
          pursuant to Clause (A) of this subsection, as the same may then be
          supplemented or amended (if such supplement or amendment shall have
          been furnished to the Holders pursuant to said Clause (A)), to such
          person with or prior to the written confirmation of the sale involved.

               (5) Each Holder shall supply such information as the Company may
          reasonably require from such Holder, or any underwriter for such
          Holders, for inclusion in such registration statement or posteffective
          amendment.

               (6) The Company's agreements with respect to the Warrants and
          Warrant Shares in this Section will continue in effect regardless of
          the exercise or surrender of this Warrant.

               (7) Any notices or certificates by the Company to the Holder and
          by the Holder to the Company shall be deemed delivered if in writing
          and delivered personally or sent by certified mail, return receipt
          requested, to the Holder, addressed to the Holder at the Holder's
          address as set forth on the Warrant or stockholder register of the
          Company, or, if the Holder has designated, by notice in writing to the
          Company, any other address, to such other address, and, if to the
          Company, addressed to it at 877 North 8th West, Riverton, Wyoming,
          82501. The Company may change its address by written notice to the
          Holder.

     (K) TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933. The Company may
cause the following legend, or one similar thereto, to be set forth on the
Warrants and on each certificate representing Warrant Shares or any other
security issued or issuable upon exercise of this Warrant not theretofore
distributed to the public or sold to underwriters for distribution to the public
pursuant to Section (j) hereof; unless legal counsel for the Company is of the
opinion as to any such certificate that such legend, or one similar thereto, is
unnecessary:

     "The securities represented by this certificate may not be offered for
     sale, sold or otherwise transferred except pursuant to an effective
     registration statement made under the Securities Act of 1933 (the
     "Act") and under any applicable state securities

<PAGE>


U.S. Energy Corp.
Warrant to Purchase Common Shares
Page 13

     law, or pursuant to an exemption from registration under the Act and
     under any applicable state securities law, the availability of which
     is to be established to the satisfaction of the Company."

     (L) EXCHANGE PROVISIONS.

          (1) For purposes of this Section (l), this Warrant shall be
     deemed to represent the same number of Warrants as there are Warrant
     Shares underlying this Warrant. For example, if there are 10,000
     Warrant Shares underlying this Warrant, then for purposes of this
     Section (l) the Holder shall be deemed to hold 10,000 Warrants.

          (2) For purposes of this Section (l), the following terms shall
     have the following meanings:

               (A) "Current Market Value of a Warrant Share" shall be the
          value of a Warrant Share as determined under Section (c)(1) or
          (2) hereof except that the time of the determination thereunder
          shall be the last business day prior to the day the Company
          receives a notice from the Holder under this Section (l).

               (B) "Warrant Value" shall mean the Current Market Value of a
          Warrant Share minus or less the Exercise Price payable under this
          Warrant as of the close of business on the last business day
          prior to the day the Company receives a notice from the Holder
          under this Section (l).

          (3) The Holder shall have the right to exchange, in a cashless
     transaction, all or part of the Holder's Warrants for Common Shares
     issued by the Company at anytime prior to the Expiration Date of such
     Warrants by providing written notice ("Notice") to the Company. Such
     Notice may only be provided after September 20, 1998, and only at a
     time when the Company's Common Shares are listed or approved for
     trading or quotation on a domestic or foreign exchange, interdealer
     trading system, or national quotation bureau. Such Notice shall set
     forth the number of Warrants which the Holder elects to exchange for
     Common Shares.

          (4) Within 10 days after receipt of such Notice by the Company,
     the Company shall issue the number of Common Shares of the Company to
     the Holder which is determined by dividing the Warrant Value of the
     Warrants being exchanged by the Current Market Value of a Warrant
     Share as of the date the Notice is received by the Company.

          (5) The Holder shall surrender the Warrant which the Holder is
     exchanging for Common Shares upon receipt thereof. If the entire
     Warrant is being exchanged by the Holder for Common Shares, the
     Company shall cancel the entire Warrant. If less than the entire
     Warrant is being exchanged for Common Shares, the Company shall issue
     a new Warrant to the Holder representing the portion of this Warrant
     which was not exchanged for Common Shares.

<PAGE>


U.S. Energy Corp.
Warrant to Purchase Common Shares
Page 14

     (M) APPLICABLE LAW. This Warrant shall be governed by, and construed
in accordance with, the laws of the state of Colorado.


Dated: _________________, 1999.

                                            U.S. ENERGY CORP.



                                            BY: ________________________________
                                                 John L. Larsen,
                                                 Chief Executive Officer



















<PAGE>


U.S. Energy Corp.
Warrant to Purchase Common Shares
Page 15

                                  PURCHASE FORM

                                                 DATED:________________, 19_____

     The undersigned hereby irrevocably elects to exercise the Warrant to
the extent of purchasing ____________ shares of Common Shares and hereby
makes payment of $_______________ in payment of the actual exercise price
thereof.

                  INSTRUCTIONS FOR REGISTRATION OF SHARES
                  ---------------------------------------

 Name:__________________________________________________________________________
                (Please typewrite or print in block letters)

 Address:_______________________________________________________________________

 Signature:_____________________________________________________________________

                              ASSIGNMENT FORM
                              ---------------

                                                 DATED:_______________, 19______

     FOR VALUE RECEIVED, _______________________________________________________

hereby sells, assigns and transfers unto _______________________________________

Name:___________________________________________________________________________
                (Please typewrite or print in block letters)

Address:________________________________________________________________________

the right to purchase Common Shares represented by this Warrant to the extent of
Common Shares as to which such right is exercisable and does hereby irrevocably
constitute and appoint, attorney, to transfer the same on the books of the
Company with full power of substitution in the premises.


                                       Signature:  _____________________________



<PAGE>



                                Amendment to the
                      Warrant to Purchase Common Shares of
                                         U.S. Energy Corp., which is dated
                                September 1, 1999

For good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto mutually agree as follows:

     1.   U.S. Energy Corp. ("Company") issued a Warrant to Purchase Common
          Shares ("Warrant") dated September 1, 1999, to _________ ("Holder").
          The Company and the Holder are entering into this Amendment to the
          Warrant for the purpose of setting forth their agreement to change the
          Warrant. Such changes shall become legally effective at 3:00 p.m.,
          Mountain Time, on September 19, 2002 ("Effective date").

     2.   The Company and the Holder agree that the expiration date of the
          Warrant shall be extended from 3:30 p.m. Mountain Time, on September
          19, 2002, to 3:30 p.m. Mountain Time, on July 19, 2003 ("New
          Expiration Date"). The period from the Effective date of this
          Amendment to the New Expiration Date shall be referred to as the
          "Extension Period".

     3.   The Company and the Holder agree that the Holder shall be entitled to
          purchase __________ Common Shares of the Company at a purchase price
          of $3.64 per share during the Extension Period. Paragraph (f)(6) of
          the warrant provides for the adjustment of the number of Common Shares
          underlying the Warrant and for the adjustment of the purchase price of
          Common Shares underlying the Warrant upon the occurrence of certain
          dilutive events. The Holder agrees with the Company that Paragraph
          (f)(6) of the Warrant shall be void and of no legal effect during the
          Extension Period. Therefore, during the Extension Period, dilutive
          events under Paragraph (f)(6) of the warrant will not change the
          number of Common shares underlying the Warrant (__________) and will
          not change the purchase price of shares under the Warrant ($3.64 per
          share).

     4.   The Holder believes that dilutive events have occurred and may occur
          under Paragraph (f)(6) of the Warrant during the period after the
          effective date of the Amendment. As of the Effective Date of this
          Amendment, the Holder agrees to waive all of his rights to adjustments
          under Paragraph (f)(6) of the Warrant as a result of any such dilutive
          events during such period.

     5.   Paragraph (1) of the Warrant contains provisions granting the Holder
          the right to exercise the Warrant in a "cashless exercise"
          transaction. The Holder agrees with the Company that Paragraph (1) of
          the Warrant shall be void and of no legal effect during the Extension
          Period. Therefore, during the Extension Period, the Holder will not be
          entitled to exercise the Warrant in a "cashless exercise" transaction.

<PAGE>


     6.   Except as specifically provided herein, no other changes are being
          made in the Warrant or the Amendment to the Warrant. The Warrant and
          the Amendment to the Warrant shall not be changed until the Effective
          Date of this Amendment.

Date: Legally effective at 3:00 p.m. on September 19, 2002.


U.S. Energy Corp.


By:  __________________________________          ____________________
         Keith G. Larsen, President                Date Signed



     __________________________________          ____________________
                                                   Date Signed


<PAGE>


                                 LIST OF HOLDERS


                                                         NO. OF SHARES
              NAME                                    UNDERLYING WARRANTS
              ----                                    -------------------

              Mark Reinstein                                  1,760
              Michael Bagnulo                                   412
              Mike Nixson                                       704
              Robert Long                                    31,335
              Steve Smitten                                     137
              Tom Bazely                                        137
              Troy G. Taggart                                   550
              William Garmello                                  550
              Willima Gavin Kessler                             275
              William Powers                                    550
              William Todd Mauney                               137
              Andy Galy                                       1,100
              Ben Bourgeois                                     192
              Chris Donofrie, First Funding                     275
              David Berkowitz                                   412
              Donna Schulze                                     550
              Eric Stroud                                     1,100
              Greg Powers                                       165
              John P. Kanouff                                31,335
              John Shuster                                    1,788
              Kurt Novey                                        550
              Leonard Alsfeld                                   550
                                                             ------

                  Total                                      74,564


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5.1
<SEQUENCE>7
<FILENAME>ex5-1s3initial_filing.txt
<DESCRIPTION>LEGAL OPINION & CONSENT
<TEXT>
                                                            EXHIBIT 5.1 AND 23.1

Stephen E. Rounds, Attorney
1544 York Street, Suite 110
Denver, Colorado 80220

March 6, 2003

U.S. Energy Corp.
877 North 8th West
Riverton, Wyoming 82501

Re:  Registration Statement on Form S-3

Gentlemen:

     U.S. Energy Corp. (the "company") has filed a registration statement with
the Securities and Exchange Commission to register the resale of up to 882,460
shares of common stock owned (or to be owned on exercise of derivative
securities including convertible debt) by selling security holders, under
section 5 of the Securities Act of 1933. We have acted as counsel to the company
in connection with the preparation and filing of the registration statement.

     Our legal opinion and consent to be named in the registration statement,
are required to be provided in connection with such registration statement, and
are required to be filed as exhibits to the registration statement.

                               DOCUMENTS REVIEWED

     We have examined originals, certified copies or other copies identified to
out satisfaction, of the following:

     1.   Articles of Incorporation of the company.

     2.   Bylaws of the company.

     3.   All exhibits listed in Part II of the registration statement.

     4.   Part I of the registration statement.

     5.   Minutes of proceedings of the company's board of directors to the date
          hereof.

     6.   Other documents as appropriate under the circumstances.




<PAGE>


U.S. Energy Corp.
March 6, 2003
Page -2-


     We also have consulted with officers and representatives of the company,
and received such representations and assurances concerning the exhibits
described in paragraph 3 and the registration statement described in paragraph
4, as we have deemed advisable or necessary under the circumstances. Although I
have not undertaken independent verification of the matters covered by this
paragraph, I have no reason to believe that the representations and assurances
received are materially inaccurate or false.





                               OPINION AND CONSENT

     Based on our review of the documents listed above, it is our opinion that
the shares of common stock to be sold by the selling shareholders pursuant to
the registration statement (when effective and subject to its continuing in
effect during such offers and sales) will be duly and validly issued, fully paid
and non-assessable shares of the common stock of the company under the laws of
the state of Wyoming.

     No opinion is expressed, and none shall be inferred, with respect to the
financial statements incorporated by reference into the registration statement.

     We hereby consent to the filing of this opinion as an exhibit to the
registration statement on Form S-3. However, we do not admit that we are in the
category of those persons whose consent is required to be so filed by Section
7(a) of the Securities Act of 1933.



Yours Sincerely,


/s/   Stephen E. Rounds



<PAGE>



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.2
<SEQUENCE>8
<FILENAME>ex23-2s3initial_filing.txt
<DESCRIPTION>AUDIT FIRM CONSENT
<TEXT>
                                                                    EXHIBIT 23.2

                                                                  GRANT THORNTON








               CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS




We have issued our reports dated July 18, 2002 accompanying the consolidated
financial statements of U.S. Energy Corp. (a Wyoming corporation) and
subsidiaries appearing in the 2002 Annual Report of the Company to its
shareholders and accompanying the schedule included in the Annual Report on Form
10-K/A for the year ended May 31, 2002 which are incorporated by reference in
this Registration Statement (initial filing). We consent to the incorporation by
reference in the Registration Statement of the aforementioned reports and to the
use of our name as it appears under the caption "Experts."




                                            /s/  Grant Thornton LLP



Denver, Colorado
March 7, 2003









1600 Broadway, Suite 1800
Denver, CO 80202
T 303.861.5555
F 303.839.5711 Audit
F 303.839.5701 Tax


<PAGE>





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>9
<FILENAME>ex99-1s3initial_filing.txt
<DESCRIPTION>RESERVE REPORT SUMMARY & FIRM'S CONSENT
<TEXT>
     RYDER SCOTT COMPANY                                      FAX (713) 651-0849
     PETROLEUM CONSULTANTS
     1100 LOUISANNA    SUITE 3800     HOUSTON, TEXAS    TELEPHONE (713) 651-9191




                                                                    EXHIBIT 99.1





                      CONSENT OF RYDER SCOTT COMPANY, L.P.


         We hereby consent to (1) the use in the prospectus (the "Prospectus")
constituting a part of the registration statement on Form S-3 (Initial Filing)
filed by U.S. Energy Corp., a Wyoming corporation (the "Company") under the
Securities Act of 1933, of information contained in our reserve report letter
relating to the gas reserves and revenue, as of December 31, 2002, of certain
interests held by Rocky Mountain Gas, Inc., a subsidiary of the Company; (ii)
all references to such reserve report letter and/or to this firm in the
Prospectus; (iii) our being named as an expert in the Prospectus; and (iv) the
incorporation of this consent into any registration statement filed for the same
offering pursuant to rule 462(b) or (c) under the Securities Act of 1933.





                                           /s/  RYDER SCOTT COMPANY, L.P.




Houston, Texas
March 8, 2003












      1100, 530-8TH AVENUE, S.W.                 CALGARY, ALBERTA T2P3S8
     600 17TH STREET, SUITE 1610N              DENVER, COLORADO 80202-5416

          TEL (403) 262-2799                        FAX (403) 262-2790
          TEL (303) 623-9147                        FAX (303) 623-4258

<PAGE>



     RYDER SCOTT COMPANY                                      FAX (713) 651-0849
     PETROLEUM CONSULTANTS
     1100 LOUISANNA    SUITE 3800     HOUSTON, TEXAS    TELEPHONE (713) 651-9191


                                          February 25, 2003




Rocky Mountain Gas, Inc.
1 East Alger Street, Suite 206
Sheridan, Wyoming 82801

Gentlemen:

     At your request, we have prepared an estimate of the reserves, future
production, and income attributable to certain leasehold interests of Rocky
Mountain Gas, Inc. (RMG) as of December 31, 2002. The subject properties are
located in the Bobcat Field, Campbell County, Wyoming. The income data were
estimated using the Securities and Exchange Commission (SEC) requiresments for
future price and cost parameters.

     The estimated reserves and future income amounts presented in this report
are related to hydrocarbon prices. Hydrocarbon prices in effect at December 31,
2002 were used in the preparation of this report as required by SEC rules;
howeve, actual future prices may vary significantly from December 31, 2002
prices. Therefore, volumes of reserves actually recovered and amounts of inocme
actually received may differ significantly from the estimated quantities
presented in this report. The results of this study are summarized below.

                                 SEC PARAMETERS
                     Estimated Net Reserves and Inocme Data
                         Certain Leasehold Interests of
                            ROCKY MOUNTAIN GAS, INC.
                                  Bobcat Field
                             As of December 31, 2002
               -------------------------------------------------

                                                     Proved
                                    -------------------------------------------
                                     Developed                        Total
                                     Producing     Undeveloped        Proved
                                    -----------    -----------     ------------
     NET REMAINING RESERVES
     ----------------------
       Gas - MMCF                          490            96              586

     INCOME DATA
     -----------
       Future Gross Revenue         $1,394,130      $273,082       $1,667,212
       Deductions                      473,728       142,180          615,908
       Future Net Income (FNI)      $  920,402      $130,902       $1,051,304

       Discounted FNI @ 10%         $  793,481      $ 94,947       $  888,428

     All gas volumes are sales gas expressed in millions of cubic feet (MMCF) at
the official temperature and pressure bases of Wyoming, which are 60 degrees and
14.73 psia.





      1100, 530-8TH AVENUE, S.W.                 CALGARY, ALBERTA T2P3S8
     600 17TH STREET, SUITE 1610N              DENVER, COLORADO 80202-5416

          TEL (403) 262-2799                        FAX (403) 262-2790
          TEL (303) 623-9147                        FAX (303) 623-4258


<PAGE>


Rocky Mountain Gas, Inc.
February 25, 2003
Page 2


     The future gross revenue is after the deduction of production taxes. The
deductions comprise the normal direct costs of operating the wells, ad valorem
taxes, completion costs, and development costs. The future net income is before
the deduction of state and federal income taxes and general administrative
overhead, and has not been adjusted for outstanding loans that may exist nor
does it include any adjustment for cash on hand or undistributed income. No
attempt was made to quantify or otherwise account for any accumulated gas
production imbalances that may exist. Gas reserves account for 100 percent of
total future gross revenue from proved reserves.

     The discounted future net income shown above was calculated using a
discount rate of 10 percent per annum compounded monthly. Future net income was
discounted at four other discount rates which were also compounded monthly.
These results are shown on each estimated projection of future production and
income presented in a later section of this report and in summary form below.

                                          Discounted Future Net Income
                                            As of December 31, 2002
                                       ---------------------------------
                   Discount Rate                    Total
                     Percent                       Proved
                  ---------------             ----------------
                         5                        $964,586
                        15                        $821,264
                        20                        $761,789
                        25                        $708,917

     The results shown above are presented for your information and should not
be construed as our estimate of fair market value.

RESERVES INCLUDED IN THIS REPORT

     The proved reserves included herein conform to the definition as set forth
in the Securities and Exchange Commission's Regulation S-X Part 210.4-10 (a) as
clarified by subsequent Commission Staff Accounting Bulletins. The definition of
proved reserves is included under the tab "Petroleum Reserves Definitions" in
this report.

     Because of the direct relationship between volumes of proved undeveloped
reserves and development plans, we include in the proved undeveloped category
only reserves assigned to undeveloped locations that we have been assured will
definitely be drilled.

     The various reserve status categories are defined under the tab "Petroleum
Reserves Definitions" in this report.

ESTIMATES OF RESERVES

     Producing reserves were estimated based on performance analysis and
volumetric calculations. Undeveloped reserves were based on analogy to offset
wells. All of the reserves are based on primary recovery from coal seams.

     The reserves included in this report are estimates only and should not be
construed as being exact quantities. They mayor may not be actually recovered,
and if recovered, the revenues therefrom and the actual costs related thereto
could be more or less than the estimated amounts. Moreover, estimates of
reserves may increase or decrease as a result of future operations.



                    RYDER SCOTT COMPANY PETROLEUM CONSULTANTS


<PAGE>


Rocky Mountain Gas, Inc.
February 25, 2003
Page 3


FUTURE PRODUCTION RATES

     Initial production rates are based on the current producing rates for those
wells now on production. Test data and other related information were used to
estimate the anticipated initial production rates for those wells or locations
that are not currently producing. If no production decline trend had been
established, future production rates were inclined during the dewatering phase
or held constant, as appropriate, until a decline in ability to produce was
anticipated. An estimated rate of decline was then applied to depletion of the
reserves. If a decline trend had been established, this trend was used as the
basis for estimating future production rates. For reserves not yet on
production, sales were estimated to commence at an anticipated date furnished by
RMG.

     The future production rates from wells now on production may be more or
less than estimated because of changes in market demand or allowables set by
regulatory bodies. Wells or locations that are not currently producing may start
producing earlier or later than anticipated in our estimates of their future
production rates.

HYDROCARBON PRICES

     In accordance with FASB Statement No. 69, December 31, 2002 market prices
were determined using the daily gas sales price ("spot price") adjusted for gas
gathering hub and wellhead price differences (e.g. grade, transportation,
gravity, sulfur and BS&W) as appropriate. Also in accordance with SEC and FASB
specifications, changes in market prices subsequent to December 31, 2002 were
not considered in this report.

     The December 31, 2002 gas price of $3.00 per MCF was used in this report,
which was based on a Henry Hub benchmark price of $4.75 per MMBTU, less a
historical differential of $1.75 per MMBTU, times 1000 BTU per cubic foot. This
December 31, 2002 gas price was held constant throughout the life of the
properties.

     The effects of derivative instruments designated as price hedges of oil and
gas quantities were not considered or included in this report.

COSTS

     Because the historical operating cost for the subject properties are still
affected by nonreoccurring start-up cost, operating costs for the leases and
wells in this report were estimated and provided by RMG. Operating costs were
based on the operating expense reports of RMG and include only those costs
directly applicable to the leases or wells. When applicable, the operating costs
include a portion of general and administrative costs allocated directly to the
leases and wells under terms of operating agreements. No deduction was made for
indirect costs such as general administration and overhead expenses, loan
repayments, interest expenses, and exploration and development prepayments that
are not charged directly to the leases or wells.

     Development costs were furnished to us by RMG and are based on
authorizations for expenditure for the proposed work or actual costs for similar
projects. At the request of RMG, their estimate of zero abandonment costs after
salvage value for these onshore properties was used in this report. Ryder Scott
has not performed a detailed study of the abandonment costs or the salvage value
and makes no warranty for RMG's estimate.

     Current costs were held constant throughout the life of the properties.


                    RYDER SCOTT COMPANY PETROLEUM CONSULTANTS


<PAGE>


Rocky Mountain Gas, Inc.
February 25, 2003
Page 4

GENERAL

     Table A presents a one line summary of proved reserve and income data for
each of the subject properties which are ranked according to their future net
income discounted at 10 percent per year. Table B presents a one line summary of
gross and net reserves and income data for each of the subject properties. Table
C presents a one line summary of initital basic data for each of the subject
properties. Tables 1 through 34 present our estimated projection of production
and income by years beginning january 1, 2003, by section and well.

     While it may reasonably be anticipated that the future prices received for
the sale of production and the operating ocsts and other costs relating to such
production may also increase or decrease from existing levels, such changes were
in accordance with rules adopted by the SEC, omitted from consideration in
making this evaluation.

     The estimates of reserves presented herein were based upon a detailed study
of the properties in which RMG owns an interest; however, we have not made any
field examination of the properties. No consideration was given in this report
to potential environmental liabilities that may exist nor were any costs
included for potential liability to restore and clean up damages, if any, caused
by past oeprating pratices. RMG has informed us that they have furnished us all
of the accounts, records, geological and engineering data, and reports and other
data required for this investigation. The ownership interests, prices, and other
factual data furnished by RMG were accepted without independent verification.
The estimates presented in this report are based on data available through
December 2002.

     RMG has assured us of their intent and ability to proceed with the
development activities included in this report, and that they are not aware of
any legal, regulatory or political obstacles that would significantly alter
their plans.

     Neither we no any of our employees have any interest in the subject
properties and neither the employment to make this study nor the compensation is
contingent on our estimates of reserves and future income for the subject
properties.

     This report was prepared for the exclusive use and sole benefit of Rocky
Mountain Gas, inc. The data, work papers, and maps used in this report are
available for examination by authorized parties in our offices. Please contact
us if we can be of futher service.


                                       Very truly yours,

                                       RYDER SCOTT COMPANY, L.P.

                                         /s/  Joesph E. Blankenship, P.E.

                                       Joseph E. Blankenship, P.E.
                                       Senior Vice President

JEB/sw









                    RYDER SCOTT COMPANY PETROLEUM CONSULTANTS


<PAGE>


                         PETROLEUM RESERVES DEFINITIONS

                       SECURITIES AND EXCHANGE COMMISSION



INTRODUCTION
- ------------

     Reserves are those quantities of petroleum which are anticipated to be
commercially recovered from known accumulations from a given date forward. All
reserve estimates involve some degree of uncertainty. The uncertainty depends
chiefly on the amount of reliable geologic and engineering data available at the
time of the estimate and the interpretation of these data. The relative degree
of uncertainty may be conveyed by placing reserves into one of two principal
classifications, either proved or unproved. Unproved reserves are less certain
to be recovered than proved reserves and may be further sub-classified as
probable and possible reserves to denote progressively increasing uncertainty in
their recoverability. It should be noted that Securities and Exchange Commission
Regulation S-K prohibits the disclosure of estimated quantities of probable or
possible reserves of oil and gas and any estimated value thereof in any
documents publicly filed with the Commission.

     Reserves estimates will generally be revised as additional geologic or
engineering data become available or as economic conditions change. Reserves do
not include quantities of petroleum being held in inventory, and may be reduced
for usage or processing losses if required for financial reporting.

     Reserves may be attributed to either natural energy or improved recovery
methods. Improved recovery methods include all methods for supplementing natural
energy or altering natural forces in the reservoir to increase ultimate
recovery. Examples of such methods are pressure maintenance, cycling,
waterflooding, thermal methods, chemical flooding, and the use of miscible and
immiscible displacement fluids. Other improved recovery methods may be developed
in the future as petroleum technology continues to evolve.


PROVED RESERVES (SEC DEFINITIONS)
- ---------------------------------

     Securities and Exchange Commission Regulation S-X Rule 4-10 paragraph (a)
defines proved reserves as follows:

PROVED OIL AND GAS RESERVES. Proved oil and gas reserves are the estimated
quantities of crude oil, natural gas, and natural gas liquids which geological
and engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions, i.e., prices and costs as of the date the estimate is made. Prices
include consideration of changes in existing prices provided only by contractual
arrangements, but not on escalations based upon future conditions.

     (i) Reservoirs are considered proved if economic producibility is supported
     by either actual production or conclusive formation test. The area of a
     reservoir considered proved includes:

          (A) that portion delineated by drilling and defined by gas-oil and/or
          oil-water contacts, if any; and









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          (B) the immediately adjoining portions not yet drilled, but which can
          be reasonably judged as economically productive on the basis of
          available geological and engineering data. In the absence of
          information on fluid contacts, the lowest known structural occurrence
          of hydrocarbons controls the lower proved limit of the reservoir.

     (ii) Reserves which can be produced economically through application of
     improved recovery techniques (such as fluid injection) are included in the
     "proved" classification when successful testing by a pilot project, or the
     operation of an installed program in the reservoir, provides support for
     the engineering analysis on which the project or program was based.

     (iii) Estimates of proved reserves do not include the following:

          (A) oil that may become available from known reservoirs but is
          classified separately as "indicated additional reserves";

          (B) crude oil, natural gas, and natural gas liquids, the recovery of
          which is subject to reasonable doubt because of uncertainty as to
          geology, reservoir characteristics, or economic factors;

          (C) crude oil, natural gas, and natural gas liquids, that may occur in
          undri"ed prospects; and

          (D) crude oil, natural gas, and natural gas liquids, that may be
          recovered from oil shales, coal, gilsonite and other such sources.

PROVED DEVELOPED OIL AND GAS RESERVES. Proved developed oil and gas reserves are
reserves that can be expected to be recovered through existing wells with
existing equipment and operating methods. Additional oil and gas expected to be
obtained through the application of fluid injection or other improved recovery
techniques for supplementing the natural forces and mechanisms of primary
recovery should be included as "proved developed reserves" only after testing by
a pilot project or after the operation of an installed program has confirmed
through production response that increased recovery will be achieved.

PROVED UNDEVELOPED RESERVES. Proved undeveloped oil and gas reserves are
reserves that are expected to be recovered from new wells on undrilled acreage,
or from existing wells where a relatively major expenditure is required for
recompletion. Reserves on undrilled acreage shall be limited to those drilling
units offsetting productive units that are reasonably certain of production when
drilled. Proved reserves for other undri"ed units can be claimed only where it
can be demonstrated with certainty that there is continuity of production from
the existing productive formation. Under no circumstances should estimates for
proved undeveloped reserves be attributable to any acreage for which an
application of fluid injection or other improved recovery technique is
contemplated, unless such techniques have been proved effective by actual tests
in the area and in the same reservoir.

     Certain Staff Accounting Bulletins published subsequent to the promulgation
of Regulation S-X have dealt with matters relating to the application of
financial accounting and disclosure rules for oil and gas producing activities.
In particular, the following interpretations extracted from Staff Accounting
Bulletins set forth the Commission staff's view on specific questions pertaining
to proved oil and gas reserves.





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     Economic producibility of estimated proved reserves can be supported to the
satisfaction of the Office of Engineering if geological and engineering data
demonstrate with reasonable certainty that those reserves can be recovered in
future years under existing economic and operating conditions. The relative
importance of the many pieces of geological and engineering data which should be
evaluated when classifying reserves cannot be identified in advance. In certain
instances, proved reserves may be assigned to reservoirs on the basis of a
combination of electrical and other type logs and core analyses which indicate
the reservoirs are analogous to similar reservoirs in the same field which are
producing or have demonstrated the ability to produce on a formation test.
(extracted from SAB-35)

     In determining whether "proved undeveloped reserves" encompass acreage on
which fluid injection (or other improved recovery technique) is contemplated, is
it appropriate to distinguish between (i) fluid injection used for pressure
maintenance during the early life of a field and (ii) fluid injection used to
effect secondary recovery when a field is in the late stages of depletion?
....The Office of Engineering believes that the distinction identified in the
above question may be appropriate in a few limited circumstances, such as in the
case of certain fields in the North Sea. The staff will review estimates of
proved reserves attributable to fluid injection in the light of the strength of
the evidence presented by the registrant in support of a contention that
enhanced recovery will be achieved. (extracted from SAB-35)

     Companies should report reserves of natural gas liquids which are net to
their leasehold interest, i.e., that portion recovered in a processing plant and
allocated to the leasehold interest. It may be appropriate in the case of
natural gas liquids not clearly attributable to leasehold interests ownership to
follow instruction (b) of Item 2(b)(3) of Regulation S-K and report such
reserves separately and describe the nature of the ownership. (extracted from
SAB-35)

     The staff believes that since coalbed methane gas can be recovered from
coal in its natural and original location, it should be included in proved
reserves, provided that it complies in all other respects with the definition of
proved oil and gas reserves as specified in Rule 4- 10(a)(2) including the
requirement that methane production be economical at current prices, costs, (net
of the tax credit) and existing operating conditions. (extracted from SAB-85)

     Statements in Staff Accounting Bulletins are not rules or interpretations
of the Commission nor are they published as bearing the Commission's official
approval; they represent interpretations and practices followed by the Division
of Corporation Finance and the Office of the Chief Accountant in administering
the disclosure requirements of the Federal securities laws.

SUB-CATEGORIZATION OF DEVELOPED RESERVES (SPE/WPC DEFINITIONS)

     In accordance with guidelines adopted by the Society of Petroleum Engineers
(SPE) and the World Petroleum Congress (WPC), developed reserves may be
sub-categorized as producing or non-producing.

PRODUCING. Reserves sub-categorized as producing are expected to be recovered
from completion intervals which are open and producing at the time of the
estimate. Improved recovery reserves are considered producing only after the
improved recovery project is in operation.








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NON-PRODUCING. Reserves sub-categorized as non-producing include shut-in and
behind pipe reserves. Shut-in reserves are expected to be recovered from (1)
completion intervals which are open at the time of the estimate but which have
not started producing, (2) wells which were shut-in awaiting pipeline
connections or as a result of a market interruption, or (3) wells not capable of
production for mechanical reasons. Behind pipe reserves are expected to be
recovered from zones in existing wells, which will require additional completion
work or future recompletion prior to the start of production.














































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