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<SEC-DOCUMENT>0000101594-09-000064.txt : 20090828
<SEC-HEADER>0000101594-09-000064.hdr.sgml : 20090828
<ACCEPTANCE-DATETIME>20090828162126
ACCESSION NUMBER:		0000101594-09-000064
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20090824
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20090828
DATE AS OF CHANGE:		20090828

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:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-06814
		FILM NUMBER:		091043519

	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>
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<TYPE>8-K
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<DESCRIPTION>8-K 8-26-09 BRIGHAM
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 7.2pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">SECURITIES AND EXCHANGE COMMISSION</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 7.2pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Washington, D.C. 20549</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 7.2pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">CURRENT REPORT</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 7.2pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Pursuant to Section 13 or 15(d) of the</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 7.2pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Securities Exchange Act of 1934</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 7.2pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Date of Report (date of earliest event reported): August 28, 2009 (August 24, 2009)</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 7.2pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(Exact Name of Company as Specified in its Charter)</font></div></td></tr></table></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">83-0205516</font></div></td></tr><tr>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(State or other jurisdiction of</font></div></td>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(I.R.S. Employer</font></div></td></tr><tr>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">incorporation or organization)</font></div></td>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Identification No.)</font></div></td></tr><tr>
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<td align="left" valign="top" width="23%"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160; </font></td></tr><tr>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Glen L. Larsen Building</font></div></td>
<td align="left" valign="top" width="20%"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160; </font></td>
<td align="left" valign="top" width="23%"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160; </font></td></tr><tr>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">877 North 8<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">th</font> West</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Registrant's telephone number, including area code: <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(307) 856-9271</font></font></div></td></tr></table></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Not Applicable</font></div></td></tr><tr>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Former Name, Former Address or Former Fiscal Year,,</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">If Changed From Last Report)</font></div></td></tr></table></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;o Written communications pursuant to Rule 425 under the Securities Act</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;o Soliciting material pursuant to Rule 14a-12 under the Exchange Act</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Section 1: Registrant&#8217;s Business and Operations</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Item 1.01.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Entry into a Material Definitive Agreement</font></div>
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<br></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">On August 24, 2009, U.S. Energy Corp. (&#8220;<font style="DISPLAY: inline; TEXT-DECORATION: underline">USE</font>&#8221;) and Brigham Oil &amp; Gas, L.P. a Delaware limited partnership wholly-owned by Brigham Exploration Company (a Delaware corporation), entered into a Drilling Participation Agreement (the &#8220;<font style="DISPLAY: inline; TEXT-DECORATION: underline">DPA</font>&#8221;).&#160;&#160;The
DPA provides for USE and Brigham to jointly explore for oil in the Bakken and Three Forks formations, in up to 19,200 gross acres in a portion of Brigham&#8217;s Rough Rider prospect in Williams and McKenzie Counties, North Dakota.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The DPA expires on December 31, 2010, however, USE will continue to hold the working interests it earns prior to expiration.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">USE&#8217;s total drilling and completion expenditures for the initial six wells are expected to be in the range of $17.5 million to $19 million.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">For further information, please see USE&#8217;s press release of August 26, 2009, attached to this Report.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Section 9. Financial Statements and Exhibits</font>.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">10.1&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Drilling Participation Agreement (without exhibits).</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">10.2&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Press Release</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">SIGNATURES</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">U.S. ENERGY CORP.</font></div></td></tr><tr>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Dated: August 28, 2009</font></div></td>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">By:</font></div></td>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">/s/ Keith G. Larsen</font></div></td></tr><tr>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Keith G. Larsen, CEO</font></div></td></tr></table></div>
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<TYPE>EX-10.1
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<FILENAME>exhibit10_1.htm
<DESCRIPTION>DRILLING PARTICIPATION AGREEMENT
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">DRILLING PARTICIPATION AGREEMENT</font></font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(Fifteen Well Program)</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Recitals:</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Brigham Oil &amp; Gas, L.P., a Delaware limited partnership (&#8220;Brigham&#8221;), is active in the exploration and development of oil and gas properties in the domestic United States.</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">U.S. Energy Corp. (&#8220;U.S. Energy&#8221;) and Brigham desire to enter into this Participation Agreement (the &#8220;Agreement&#8221;) to provide for U.S. Energy&#8217;s participation with Brigham in the exploration and development of up to fifteen well units within properties owned, in whole or in part, by Brigham, within Brigham&#8217;s
Rough Rider Project Area described in Exhibit A attached hereto and incorporated herein, upon and subject to the provisions herein contained.</font></div>
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<br></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Agreement:</font></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby acknowledged, Brigham and U.S. Energy hereby act, agree and covenant as follows:</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Section 1.&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Defined Terms</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">.</font>&#160;&#160;As used herein, the following terms shall have the following meanings:</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#8220;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Affiliate</font>&#8221; means, with respect to any Person:&#160;&#160;(a) any other Person directly or indirectly owning, controlling or holding with power to vote 25% or more of the outstanding voting securities of such Person, (b) any other Person 25% or more of whose
outstanding voting securities are directly or indirectly owned, controlled or held with power to vote by such Person, and (c) any other Person directly or indirectly controlling, controlled by or under common control with such Person.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#8220;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Agreement Term</font>&#8221; means the period beginning on the date hereof, and ending on December 31, 2010, at 11:59 p.m. Austin, Texas local time, unless extended by mutual written agreement.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#8220;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Brigham Properties</font>&#8221; means all of Brigham&#8217;s undivided right, title and interest in and to oil, gas and other mineral leases owned by Brigham within the Rough Rider Project Area lands described in Exhibit A attached hereto and incorporated herein.&#160;&#160;However,
the Parties recognize that during the term of this Agreement Brigham may acquire an interest in the minerals underlying oil, gas and mineral leases and in such event, Brigham Properties shall in no event include Brigham&#8217;s ownership interest in such minerals or it&#8217;s associated share of the lessor&#8217;s royalty due to its ownership in such minerals.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#8220;<font style="DISPLAY: inline; TEXT-DECORATION: underline">U.S. Energy Expenditures</font>&#8221; means, with respect to any Initial Well, all costs and expenses billed to U.S. Energy pursuant to the governing Operating Agreements and paid by U.S. Energy to Brigham for drilling, completing, equipping, maintaining and operating such
Initial Well, but excluding (whether or not so billed by Brigham) all production taxes and property taxes assessed as a percentage of the value of production or a rate per unit of production with respect to such Initial Well, the production therefrom, or the Well Unit on which such Initial Well is located.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#8220;<font style="DISPLAY: inline; TEXT-DECORATION: underline">U.S. Energy Net Receipts</font>&#8221; means, with respect to any Initial Well, all receipts and revenues of U.S. Energy from or with respect to such Initial Well (whether from the sale of oil and gas production, the sale of surplus equipment, or otherwise), net of all production
taxes and property taxes assessed as a percentage of the value of production or a rate per unit of production with respect to such Initial Well, the production therefrom, or the Well Unit on which such Initial Wells are located.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#8220;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Payout</font>&#8221; means, with respect to any group of Initial Wells in a Well Calculation Group, such point in time when the cumulative US Energy Net Receipts from the group of Initial Wells equals or exceeds all US Energy Expenditures for such Initial Wells.&#160;&#160;With
respect to any Initial Well drilled within the Third Group of Well Units, &#8220;Payout&#8221; means such point in time when total U.S. Energy Net Receipts for the Initial Well equals the total U.S. Energy Expenditures for such Initial Well.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#8220;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Initial Well</font>&#8221; means the initial (and only the initial) well to be drilled on each of the fifteen Well Units established and designated by Brigham within the Brigham Properties, or on lands pooled or unitized therewith.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#8220;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Parties</font>&#8221; means U.S. Energy and Brigham.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#8220;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Party</font>&#8221; means either U.S. Energy or Brigham.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#8220;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Subsequent Well</font>&#8221; shall mean any well to be drilled within an applicable Well Unit after the Initial Well has been drilled and completed or plugged and abandoned within such Well Unit.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#8220;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Well Unit</font>&#8221; means the drilling and production unit established for an Initial Well under applicable laws, rules or regulations of governmental authorities having jurisdiction for the drilling and production of such Initial Well.&#160;&#160;The exact configuration
of any such Well Unit shall be designated by Brigham.&#160;&#160;It is anticipated that each Well Unit will be two sections in size, but the Parties recognize that in the event that one or both of the sections included in a Well Unit are of an irregular size, a Well Unit may be slightly more or less than 1,280 acres.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#8220;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Well Calculation Group</font>&#8221; means, with respect to the calculation of Payout, (a) the six Initial Wells drilled within the First Six Well Units, (b) the four Initial Wells drilled within the Second Group of Well Units.&#160;&#160;The Parties recognize that there
is no Well Calculation Group for the Third Group of Well Units as Payout is calculated on an individual basis for each Initial Well drilled within the Third Group of Well Units.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#8220;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Working Interest</font>&#8221; means the mineral interest minus the royalty interest allocable to a lessor under and oil, gas and mineral lease which bears all of the costs and expenses of drilling, completion, maintenance, development and operation of a Well Unit or Units,
allocable to a lessee under an oil, gas and mineral lease and includes the associated revenue interest.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Section 2.&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Representations of Brigham</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">.</font>&#160;&#160;Brigham represents to U.S. Energy that:</font></div>
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<br></div>
<div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(a)&#160;&#160;&#160;&#160;&#160;&#160;Brigham is a limited partnership, duly formed and legally existing under the laws of the State of Delaware.&#160;&#160;Brigham has full power to enter into and perform its obligations under this Agreement and has taken all appropriate action to authorize entering into this Agreement and performance
of its obligations hereunder.&#160;&#160;Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, nor the compliance with the terms hereof, will result in any material default under any material agreement or instrument to which Brigham is a party or by which the Brigham Properties are bound, or violate any order, writ, injunction, decree, statute, rule or regulation applicable to Brigham or to the Brigham Properties.&#160;&#160;This Agreement constitutes
the legal, valid and binding obligation of Brigham, enforceable in accordance with its terms, except as limited by bankruptcy or other laws applicable generally to creditor&#8217;s rights and as limited by general equitable principles.</font></div>
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<br></div>
<div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(b)&#160;&#160;&#160;&#160;&#160;&#160;There are no suits, actions, claims, investigations, inquiries, proceedings or demands pending (or, to the best of Brigham&#8217;s knowledge, threatened) which affect the execution and delivery of this Agreement.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">THE EXPRESS REPRESENTATIONS OF BRIGHAM CONTAINED IN THIS SECTION OR IN ANY ASSIGNMENT EXECUTED PURSUANT HERETO ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND BRIGHAM EXPRESSLY DISCLAIMS ANY AND ALL SUCH OTHER REPRESENTATIONS AND WARRANTIES.&#160;&#160;BRIGHAM MAKES
NO WARRANTY OR REPRESENTATION, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AS TO THE ACCURACY OR COMPLETENESS OF ANY DATA, INTERPRETATIONS, REPORTS, RECORDS, PROJECTIONS, INFORMATION OR MATERIALS NOW, HERETOFORE OR HEREAFTER FURNISHED OR MADE AVAILABLE TO U.S. ENERGY IN CONNECTION WITH THIS AGREEMENT INCLUDING, WITHOUT LIMITATION, RELATIVE TO SEISMIC OR GEOLOGICAL MATTERS, PRICING ASSUMPTIONS, OR QUALITY OR QUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE BRIGHAM PROPERTIES OR THE ABILITY OR POTENTIAL
OF THE BRIGHAM PROPERTIES TO PRODUCE HYDROCARBONS OR ANY OTHER MATTERS CONTAINED IN THE PROPRIETARY DATA OR ANY OTHER MATERIALS FURNISHED OR MADE AVAILABLE TO U.S. ENERGY BY BRIGHAM OR BY BRIGHAM&#8217;S AGENTS OR REPRESENTATIVES.&#160;&#160;ANY AND ALL SUCH DATA, RECORDS, REPORTS, PROJECTIONS, INFORMATION AND OTHER MATERIALS (WRITTEN OR ORAL) FURNISHED BY BRIGHAM OR OTHERWISE MADE AVAILABLE OR DISCLOSED TO U.S. ENERGY ARE PROVIDED TO U.S. ENERGY AS A CONVENIENCE ONLY AND SHALL NOT CREATE OR GIVE RISE TO ANY
LIABILITY OF OR AGAINST BRIGHAM AND ANY RELIANCE ON OR USE OF THE SAME SHALL BE AT U.S. ENERGY&#8217;S SOLE RISK TO THE MAXIMUM EXTENT PERMITTED BY LAW.</font></div>
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<div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(c)&#160;&#160;&#160;&#160;&#160;&#160;Brigham is a qualified and experienced operator that has the expertise to drill, complete, produce and operate wells in the Bakken formation in the Williston Basin, North Dakota.</font></div>
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<br>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Section 3.&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Representations of U.S. Energy</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">.</font>&#160;&#160;U.S. Energy represents to Brigham that:</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(a)&#160;&#160;&#160;&#160;&#160;&#160;U.S. Energy is a Wyoming corporation, duly formed and legally existing under the laws of the State of Wyoming.&#160;&#160;U.S. Energy has full power to enter into and perform its obligations under this Agreement and has taken all appropriate action to authorize entering into this Agreement and performance
of its obligations hereunder.&#160;&#160;Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, nor the compliance with the terms hereof, will result in any default under any material agreement or instrument to which U.S. Energy is a party or by which U.S. Energy is bound, or violate any order, writ, injunction, decree, statute, rule or regulation applicable to U.S. Energy.&#160;&#160;This Agreement constitutes the legal, valid and binding obligation
of U.S. Energy, enforceable in accordance with its terms, except as limited by bankruptcy or other laws applicable generally to creditor&#8217;s rights and as limited by general equitable principles.</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(b)&#160;&#160;&#160;&#160;&#160;&#160;There are no suits, actions, claims, investigations, inquiries, proceedings or demands pending (or, to the best of U.S. Energy&#8217;s knowledge, threatened) which affect the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(c)&#160;&#160;&#160;&#160;&#160;&#160;U.S. Energy is a knowledgeable purchaser and owner of oil and gas properties, has the ability to evaluate (and in fact has had, and will continue to have, during the term of this Agreement, the opportunity to evaluate) the Brigham Properties for acquisition, and is acquiring its interests in the Brigham
Properties and its rights and interests hereunder for its own account and not with the present intent to make a distribution in violation of the Securities Act of 1933 as amended (and the rules and regulations pertaining thereto) or in violation of any other applicable securities laws, rules, or regulations.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Section 4.&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Participation in the Drilling and Completion of the Initial Wells Within the First Six Well Units</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">.</font></font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(a)&#160;&#160;&#160;&#160;&#160;&#160;U.S. Energy shall participate in the drilling and completion of 6 gross (3.5 to 6 net) Initial Wells within six Well Units (the &#8220;First Six Well Units&#8221;) selected by Brigham within the Rough Rider Project Area.&#160;&#160;Brigham will select each of the two section Well Units for each Initial
Well.&#160;&#160;However, the two section Well Unit established for the Brad Olson 9-16 1-H Well (the &#8220;Brad Olson Well&#8221;) located within Sections 9 and 16, Township 154N, Range102W, Williams County, North Dakota, which is currently being drilled and/or completed, shall be one of the First Six Well Units, and the BCD Farms 16-21 #1-H Well (the &#8220;BCD Farms Well&#8221;) located within Sections 16 and 21, Township 156N, Range 103W, Williams County, North Dakota, shall also be one of the First Six
Well Units.&#160;&#160;The Well Unit for the Brad Olson Well shall consist of Sections 9 and 16, Township 154N, Range 102W, Williams County, North Dakota, and the Well Unit for the BCD Farms Well shall consist of Sections 16 and 21, Township 156N, Range 103W, Williams County, North Dakota. Prior to the spudding of each of the Initial Wells within the remaining four of the First Six Well Units, Brigham shall provide U.S. Energy with a written description of the Sections to be included within the applicable Initial
Well&#8217;s Well Unit.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(b)&#160;&#160;&#160;&#160;&#160;&#160;Brigham will be designated as operator of all operations for the First Six Well Units and will participate up front with a 35% Working Interest in the Initial Well drilled and completed or plugged and abandoned within each of the First Six Well Units.&#160;&#160;U.S. Energy will participate up front</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">with a 65% Working Interest in the Initial Well drilled and completed or plugged and abandoned within each of the First Six Well Units.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(c)&#160;&#160;&#160;&#160;&#160;&#160;Once Payout has been reached for the Initial Wells that are drilled and completed within the First Six Well Units (the Well Calculation Group), U.S. Energy shall assign to Brigham 35% of its 65% interest in each of the Initial Wells located within the First Six Well Units utilizing the form of assignment
attached hereto as Exhibit C.&#160;&#160;As such, after Payout is reached for the Well Calculation Group, U.S. Energy will own a 42.25% interest and Brigham will own a 57.75% interest in the Initial Wells that were drilled within the First Six Well Units.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(d)&#160;&#160;&#160;&#160;&#160;&#160;Except as provided above with respect to the ownership in the Initial Well drilled within each of the First Six Well Units, upon the drilling and completion or plugging and abandonment of the Initial Well within each of the First Six Well Units, the Brigham Properties located within each of such First
Six Well Units shall be owned 36% by U.S. Energy and 64% by Brigham.&#160;&#160;As such, U.S. Energy will have the right to participate with a 36% Working Interest and Brigham will have the right to participate with a 64% Working Interest in all subsequent wells drilled within the First Six Well Units.</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(e)&#160;&#160;&#160;&#160;&#160;&#160;The Parties&#8217; interests in the Well Units and the wells drilled within the Well Units will be proportionately reduced for any third-party participation in the applicable Well Units and wells, as dictated by the valid, existing laws, rules and regulations applicable to such third-party leasehold
or mineral positions within the applicable Well Unit.&#160;&#160;Any third-party non-consent interest will also be borne by the Parties in proportion to their then current Working Interest in the proposed operation applicable to the non-consent interest.&#160;&#160;For example, if it is assumed that in a hypothetical situation for a Well Unit (herein referred to as &#8220;Well Unit H&#8221;) one third party (hereinafter referred to as &#8220;Third Party A&#8221;) owned oil and gas leases covering 160 net mineral
acres, another third party (hereinafter referred to as &#8220;Third Party B&#8221;) owned oil and gas leases covering 80 net mineral acres, and the oil and gas leases owned by Brigham covered the remaining 1,040 net mineral acres, and we assumed that Third Party A elects not to participate in the drilling of the Initial Well and Third Party B elects to participate in the Initial Well to be drilled and completed within Well Unit H, but Third Party B elects not pick up its proportionate part of Third Party A&#8217;s
non-consent interest, then in such event, the parties&#8217; starting Working Interests in the Initial Well would be: U.S. Energy 60.9375%, Brigham 32.8125% and Third Party B 6.25%.&#160;&#160;Upon Payout of the Initial Wells drilled within the Fist Six Well Units, U.S. Energy&#8217;s Working Interest in the Initial Well drilled in Well Unit H would be reduced to 39.609375%, Brigham&#8217;s Working Interest would be 54.140625% and Third Party B would still be at a 6.25% Working Interest.&#160;&#160;Then upon
the applicable Initial Well reaching 300% payout, Third Party A would come back into the well with a 12.5% Working Interest and U.S. Energy&#8217;s Working Interest would be reduced to 34.328125%, Brigham&#8217;s Working Interest would be reduced to 46.921875% and Third Party B would still be at 6.25%.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(f)&#160;&#160;&#160;&#160;&#160;&#160;The Parties&#8217; operations within each Well Unit shall be governed by a separate Operating Agreement in the form attached hereto as Exhibit D, naming Brigham as operator.&#160;&#160;Once a Well Unit has been designated by Brigham such Well Unit shall be deemed subject to an Operating Agreement
in the form attached hereto as Exhibit D.&#160;&#160;However, following the designation of each Well Unit, Brigham shall prepare and deliver to U.S. Energy the following documentation and pages for the Operating Agreement that governs all drilling, completion, workover and all other operations for such Well Unit: (i) a cover page describing the lands included within such Well Unit as the Contract</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
<div style="TEXT-ALIGN: justify; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Area for the Operating Agreement; (ii) multiple original execution and acknowledgment pages for the Operating Agreement; (iii) the Exhibit A to the Operating Agreement with appropriate insertions reflecting the agreements set forth in this Agreement with respect to the Well Unit and participation percentages; and (iv) the Memorandum
of Operating Agreement for such Operating Agreement in the form attached to the form Operating Agreement which is attached hereto as Exhibit D, completed to describe the lands included in the Well Unit and the participating parties. Prior to the date that preparations for the drilling of the Initial Well are expected to commence, each Party shall execute and return to Brigham fully executed and completed duplicate originals of the execution pages and acknowledgment pages to both the Operating Agreement and the
Memorandum of Operating Agreement and each Party shall incorporate all of the pages and documentation described in (i), (ii) and (iii) above into a copy of the form Operating Agreement which is attached hereto as Exhibit D which it shall retain for its records.&#160;&#160;Each Party's completed copy of the Operating Agreement shall constitute a duplicate counterpart original of the Operating Agreement which governs the Party's operations within the applicable Well Unit.&#160;&#160;Once Brigham receives the duplicate
original execution and acknowledgment pages from U.S. Energy, Brigham shall provide U.S. Energy with a copy of execution pages for Brigham.&#160;&#160;In the event that Brigham fails to timely send or U.S. Energy fails to execute and return its duplicate original execution pages to Brigham (but without a diminution of Brigham&#8217;s obligation to timely send or either Party's obligation to so execute and return duplicate original signature pages to Brigham), the Parties shall nonetheless be bound by the terms
of the Operating Agreement for such Well Unit, which terms shall be deemed to apply to the Parties as provided above.&#160;&#160;Concurrent with the execution of this Agreement the Parties shall execute duplicate originals of the Operating Agreements and Memorandum of Operating Agreements for both the Brad Olson Well Unit and the BCD Farms Well Unit and each Party shall receive one of such duplicate originals for its records.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(g)&#160;&#160;&#160;&#160;&#160;&#160;Upon the drilling and completion or plugging and abandonment of the Initial Well for a Well Unit, payment by U.S. Energy of all costs and expenses then due, and compliance by U.S. Energy of all of the terms and provisions of this Agreement and the applicable Operating Agreement, Brigham will assign
to U.S. Energy its interests in the applicable Well Unit utilizing the form of assignment attached hereto as Exhibit B.&#160;&#160;The assignment will be made with a by, through and under warranty and will only be subject to existing burdens.&#160;&#160;Some of the Brigham Properties that were acquired from third parties may be depth limited to the Bakken and the upper part of the Three Forks formations that were received by Brigham from the applicable third party.&#160;&#160;As to all other Brigham Properties
located within the applicable Well Unit, U.S. Energy will be assigned its Working Interest in all depths.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Section 5.&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Participation in the Drilling and Completion of the Initial Wells Within the Second Group of 4 Well Units</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">.</font></font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(a)&#160;&#160;&#160;&#160;&#160;&#160;U.S. Energy has an election whether to participate in the Initial Wells that are to be drilled within the second group of four two section Well Units (the &#8220;Second Group of Well Units&#8221;) selected by Brigham.&#160;&#160;U.S. Energy&#8217;s election must be for the full interest available
to U.S. Energy as set forth herein.&#160;&#160;U.S. Energy may not make a partial interest election.&#160;&#160;Within ten (10) days of its receipt of a written notice and the initial 24 hour production report(&#8220;IP&#8221;) for a minimum of four of the Initial Wells that are drilled within the First Six Well Units and written notice of the amount of the Brigham 2<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">nd</font>4 IWI as set forth in Section 5(b) below, Brigham must receive U.S.
Energy&#8217;s written election as to whether it will participate in the drilling and completion of the Initial Wells to be </font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
<div style="TEXT-ALIGN: justify; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">drilled within the Second Group of Well Units; provided, however, that in any event U.S. Energy&#8217;s election as to participation in the Second Group of Well Units must be received by Brigham no later than ten (10) days after U.S. Energy receives written notification of an IP, or plug and abandonment proposal, for the fifth Initial
Well that is drilled within the First Six Well Units, regardless of whether or not U.S. Energy has received four total IPs for Initial Wells drilled within the First Six Well Units.&#160;&#160;Prior to the end of said ten (10) day time period in which U.S. Energy must make its election as to participation in the Second Group of Well Units, U.S. Energy shall have the right to meet with Brigham in Brigham&#8217;s offices to go over with Brigham all of the data and information Brigham has with respect to the lands
and leasehold that may be included within the Second Group of Well Units.&#160;&#160;Brigham will select each of the two Section Well Units to be included in the Second Group of Well Units from the Rough Rider Project Area.&#160;&#160;In the event that U.S. Energy does not deliver its written notice within said ten (10) day time frame, or notifies Brigham that it is electing not to participate in the Second Group of Well Units, then U.S. Energy will not have any further rights or interests in the Rough Rider
Project outside of its rights in the First Six Well Units, the remaining provisions of this Section 5 shall not apply, and for a period of two years following such election (or deemed election) U.S. Energy will not compete with Brigham by acquiring any other interests of any kind within the Rough Rider Project Area outside of the interests it acquires in the First Six Well Units pursuant to this Agreement.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(b)&#160;&#160;&#160;&#160;&#160;&#160;Prior to U.S. Energy&#8217;s election as to participation in the Second Group of Well Units, Brigham will notify U.S. Energy in writing as to the amount of Brigham&#8217;s up-front Working Interest in the Initial Well to be drilled within each the Second Group of Well Units (the &#8220;BEXP 2nd4 IWI&#8221;);
provided that the BEXP 2nd4 IWI must be no less than 15% and no greater than 50%.&#160;&#160;If U.S. Energy elects to participate in the Second Group of Well Units, U.S. Energy shall participate up front with a Working Interest in the Initial Well drilled within each of the Second Group of Well Units in an amount equal to the difference between 100% and the BEXP 2nd4 IWI (herein referred to as the &#8220;U.S. Energy 2nd4 IWI&#8221;).&#160;&#160;Brigham will be designated as operator of all operations for the
Second Group of Well Units.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(c)&#160;&#160;&#160;&#160;&#160;&#160;Prior to the spudding of each of the Initial Wells within each of the Second Group of Well Units, Brigham shall provide U.S. Energy with a written description of the Sections to be included within the applicable Initial Well&#8217;s Well Unit.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(d)&#160;&#160;&#160;&#160;&#160;&#160;Once Payout has been reached for the Initial Wells that are drilled and completed within the Second Group of Well Units (the Well Calculation Group), U.S. Energy shall assign to Brigham 35% of its U.S. Energy 2nd4 IWI in each of the Initial Wells located within the Second Group of Well Units utilizing
the form of assignment attached hereto as Exhibit C.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(e)&#160;&#160;&#160;&#160;&#160;&#160;Except as provided above with respect to the ownership in the Initial Well drilled and completed or plugged and abandoned within each of the Second Group of Well Units, upon the drilling and completion or plugging and abandonment of the Initial Well within each of the Second Group of&#160;&#160;Well
Units, the Brigham Properties located within each of such Second Group of Well Units shall be owned 36% by U.S. Energy and 64% by Brigham.&#160;&#160;As such, U.S. Energy will have the right to participate with a 36% Working Interest and Brigham will have the right to participate with a 64% Working Interest in all subsequent wells drilled within the Second Group of Well Units.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(f)&#160;&#160;&#160;&#160;&#160;&#160;The Parties&#8217; interests in the Well Units and the wells drilled within the Second Group of Well Units will be proportionately reduced for any third-party participation in the applicable Well Units and wells, as dictated by valid, existing laws, rules and regulations applicable to such third-party
leasehold or mineral positions within the applicable Well Unit.&#160;&#160;Any third-party non-consent interest will also be borne by the Parties in proportion to their then current Working Interest in the proposed operation applicable to the non-consent interest.&#160;&#160;For example, if it is assumed that U.S. Energy elected to participate in the Second Group of Well Units and Brigham elected to have a 25% BEXP 2nd4 IWI and thus U.S. Energy 2nd4 IWI is 75%, in a hypothetical situation for a Well Unit (herein
referred to as &#8220;Well Unit H2&#8221;) one third party (hereinafter referred to as &#8220;Third Party A&#8221;) owned oil and gas leases covering 320 net mineral acres, another third party (hereinafter referred to as &#8220;Third Party B&#8221;) owned oil and gas leases covering 40 net mineral acres, and the oil and gas leases owned by Brigham covered the remaining 920 net mineral acres, and we assumed that Third Party A elects not to participate in the drilling of the Initial Well and Third Party B elects
to participate in the Initial Well to be drilled and completed within Well Unit H2, but Third Party B elects not pick up its proportionate part of Third Party A&#8217;s non-consent interest, then in such event, the parties&#8217; starting Working Interests in the Initial Well would be: U.S. Energy 72.65625%, Brigham 24.21875% and Third Party B 3.125%.&#160;&#160;Upon Payout of the Initial Wells drilled within the Second Group of Well Units, Brigham would be assigned 35% of U.S. Energy 2nd4 IWI and thus the parties&#8217;
Working Interests in the Initial Well would be U.S. Energy 47.2265625%, Brigham 49.6484375% and Third Party B 3.125%.&#160;&#160;Once the Initial Well reaches 300% payout, Third Party A would then come back into the well with a 25% Working Interest and the parties&#8217; Working Interests would be U.S. Energy 35.0390625%, Brigham 36.8359375%, Third Party A 25% and Third Party B 3.125%.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(g)&#160;&#160;&#160;&#160;&#160;&#160;Brigham will be designated as operator of all operations for the Second Group of Well Units and the Parties&#8217; operations within each Well Unit shall be governed by a separate operating agreement in the form attached hereto as Exhibit D.&#160;&#160;Once a Well Unit has been designated by Brigham
such Well Unit shall be deemed subject to an Operating Agreement in the form attached hereto as Exhibit D.&#160;&#160;However, following the designation of each Well Unit, Brigham shall prepare and deliver to U.S. Energy the following documentation and pages for the Operating Agreement that governs all drilling, completion, workover and all other operations for such Well Unit: (i) a cover page describing the lands included within such Well Unit as the Contract Area for the Operating Agreement; (ii) multiple original
execution and acknowledgment pages for the Operating Agreement; (iii) the Exhibit A to the Operating Agreement with appropriate insertions reflecting the agreements set forth in this Agreement with respect to the Well Unit and participation percentages; and (iv) the Memorandum of Operating Agreement for such Operating Agreement in the form attached to the form Operating Agreement which is attached hereto as Exhibit D, completed to describe the lands included in the Well Unit and the participating parties. Prior
to the date that preparations for the drilling of the Initial Well are expected to commence, each Party shall execute and return to Brigham fully executed and completed duplicate originals of the execution pages and acknowledgment pages to both the Operating Agreement and the Memorandum of Operating Agreement and each Party shall incorporate all of the pages and documentation described in (i), (ii) and (iii) above into a copy of the form Operating Agreement which is attached hereto as Exhibit D which it shall
retain for its records.&#160;&#160;Each Party's completed copy of the Operating Agreement shall constitute a duplicate counterpart original of the Operating Agreement which governs the Party's operations within the applicable Well Unit.&#160;&#160;Once Brigham receives the duplicate original execution and acknowledgment pages from U.S. Energy, Brigham shall provide U.S. Energy with a copy of execution pages for Brigham.&#160;&#160;In the event that Brigham fails to timely send or U.S. Energy fails to</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
<div style="TEXT-ALIGN: justify; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">execute and return its duplicate original execution pages to Brigham (but without a diminution of Brigham&#8217;s obligation to timely send or either Party's obligation to so execute and return duplicate original signature pages to Brigham), the Parties shall nonetheless be bound by the terms of the Operating Agreement for such Well
Unit, which terms shall be deemed to apply to the Parties as provided above.</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(h)&#160;&#160;&#160;&#160;&#160;&#160;Upon the drilling and completion or plugging and abandonment of the Initial Well for a Well Unit, payment by U.S. Energy of all costs and expenses then due, and compliance by U.S. Energy of all of the terms and provisions of this Agreement and the applicable Operating Agreement, Brigham will assign
to U.S. Energy its interests in the applicable Well Unit utilizing the form of assignment attached hereto as Exhibit B.&#160;&#160;The assignment will be made with a by, through and under warranty and will only be subject to existing burdens.&#160;&#160;Some of the Brigham Properties that were acquired from third parties may be depth limited to the Bakken and the upper part of the Three Forks formations that were received by Brigham from the applicable third party.&#160;&#160;As to all other Brigham Properties
located within the applicable Well Unit, U.S. Energy will be assigned its Working Interest in all depths.</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Section 6.&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Participation in the Drilling and Completion of the Initial Wells Within the Third Group of 5 Well Units</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">.</font></font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(a)&#160;&#160;&#160;&#160;&#160;&#160;Provided that U.S. Energy elected to participate in the Second Group of Well Units as set forth in Section 5 above, U.S. Energy shall also have an election whether to participate in the Initial Wells that are to be drilled within the third group of five two section Well Units (the &#8220;Third Group
of Well Units&#8221;) selected by Brigham.&#160;&#160;U.S. Energy&#8217;s election must be for the full interest available to U.S. Energy as set forth herein.&#160;&#160;U.S. Energy may not make a partial interest election.&#160;&#160;Within ten (10) days of its receipt of a written notice of the initial 24 hour production report (&#8220;IP&#8221;) from the sixth Initial Well or written notice of the proposed plugging and abandonment of the sixth Initial Well that is drilled within the First Six Well Units and
written notice of the amount of the Brigham 3<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">rd</font>5 IWI as set forth in Section 5(b) below, Brigham must receive U.S. Energy&#8217;s written election as to whether it will participate in the drilling and completion of the Initial Wells to be drilled within the Third Group of Well Units. Prior to the end of the ten (10) day time period in which U.S. Energy must make its election as to participation in the Third Group of Well Units, U.S.
Energy shall have the right to meet with Brigham in Brigham&#8217;s offices to go over with Brigham all of the data and information Brigham has with respect to the lands and leasehold that may be included within the Third Group of Well Units.&#160;&#160;Brigham will select each of the two Section Well Units to be included in the Third Group of Well Units from the Rough Rider Project Area.&#160;&#160;In the event that U.S. Energy does not deliver its written notice within said ten (10) day time frame, or notifies
Brigham that it is electing not to participate in the Third Group of Well Units, then U.S. Energy will not have any further rights or interests in the Rough Rider Project outside of its rights in the First Six Well Units and Second Group of Well Units, the remaining provisions of this Section 6 shall not apply, and for a period of two years following such election (or deemed election) U.S. Energy will not compete with Brigham by acquiring any other interests of any kind within the Rough Rider Project Area outside
of the interests it acquires in the First Six Well Units and the Second Group of Well Units pursuant to this Agreement.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(b)&#160;&#160;&#160;&#160;&#160;&#160;Prior to U.S. Energy&#8217;s election as to participation in the Third Group of Well Units, Brigham will notify U.S. Energy in writing as to the amount of Brigham&#8217;s up-front Working Interest</font></div>
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<br>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">in the Initial Well to be drilled within each of the Third Group of Well Units (the &#8220;BEXP 3rd5 IWI&#8221;); provided that the BEXP 3rd5 IWI must be no less than 15% and no greater than 50%.&#160;&#160;U.S. Energy will participate up front with a Working Interest in the Initial Well drilled within each of the Third Group of Well Units
in an amount equal to the difference between 100% and the BEXP 3rd5 IWI (herein referred to as the &#8220;U.S. Energy 3rd5 IWI&#8221;).&#160;&#160;Brigham will be designated as operator of all operations for the Third Group of Well Units.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(c)&#160;&#160;&#160;&#160;&#160;&#160;Prior to the spudding of each of the Initial Wells within each of the Third Group of Well Units, Brigham shall provide U.S. Energy with a written description of the Sections to be included within the applicable Initial Well&#8217;s Well Unit.</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(d)&#160;&#160;&#160;&#160;&#160;&#160;Once an Initial Well that is drilled and completed within any of the Third Group of Well Units reaches Payout, U.S. Energy shall assign to Brigham 27.7% of its U.S. Energy 3rd5 IWI in the applicable Initial Well utilizing the form of assignment attached hereto as Exhibit C.&#160;&#160;The Parties
recognize, acknonwledge and agree that, unlike the Initial Wells drilled within the First Six Well Units and the Second Group of Well Units, Payout will be calculated individually for each of the Initial Wells drilled within the Third Group of Well Units and the 27.7% back-in will be assigned to Brigham within each Initial Well upon Payout of the US Energy Expenditures incurred for such Initial Well.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(e)&#160;&#160;&#160;&#160;&#160;&#160;Except as provided above with respect to the ownership in the Initial Well drilled and completed or plugged and abandoned within each of the Third Group of Well Units, upon the drilling and completion or plugging and abandonment of the Initial Well within each of the Third Group of Well Units, the
Brigham Properties located within each of such Third Group of Well Units shall be owned 36% by U.S. Energy and 64% by Brigham.&#160;&#160;As such, U.S. Energy will have the right to participate with a 36% Working Interest and Brigham will have the right to participate with a 64% Working Interest in all subsequent wells drilled within the Third Group of Well Units.</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(f)&#160;&#160;&#160;&#160;&#160;&#160;The Parties&#8217; interests in the Well Units and the wells drilled within the Third Group of Well Units will be proportionately reduced for any third-party participation in the applicable Well Units and wells, as dictated by valid, existing laws, rules and regulations applicable to such third-party
leasehold or mineral positions within the applicable Well Unit.&#160;&#160;Any third-party non-consent interest will also be borne by the Parties in proportion to their then current Working Interest in the proposed operation applicable to the non-consent interest.&#160;&#160;For example, if it is assumed that U.S. Energy elected to participate in the Third Group of Well Units and Brigham elected to have a 25% BEXP 3rd5 IWI and thus U.S. Energy 3rd5 IWI is 75%, in a hypothetical situation for a Well Unit (herein
referred to as &#8220;Well Unit H3&#8221;) one third party (hereinafter referred to as &#8220;Third Party A&#8221;) owned oil and gas leases covering 320 net mineral acres, another third party (hereinafter referred to as &#8220;Third Party B&#8221;) owned oil and gas leases covering 40 net mineral acres, and the oil and gas leases owned by Brigham covered the remaining 920 net mineral acres, and we assumed that Third Party A elects not to participate in the drilling of the Initial Well and Third Party B elects
to participate in the Initial Well to be drilled and completed within Well Unit H3, but Third Party B elects not pick up its proportionate part of Third Party A&#8217;s non-consent interest, then in such event, the parties&#8217; starting Working Interests in the Initial Well would be: U.S. Energy 72.65625%, Brigham 24.21875% and Third Party B 3.125%.&#160;&#160;Upon Payout of the Initial Well drilled within Well Unit H3, Brigham would be assigned 27.7% of U.S. Energy 3rd5 IWI and thus the parties&#8217; Working
Interests in the Initial Well would be U.S. Energy 52.5304687%, Brigham 44.3445313% and Third Party B 3.125%.&#160;&#160;Once</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
<div style="TEXT-ALIGN: justify; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">the Initial Well reaches 300% payout, Third Party A would then come back into the well with a 25% Working Interest and the parties&#8217; Working Interests would be U.S. Energy 38.9742187%, Brigham 32.9007813%, Third Party A 25% and Third Party B 3.125%.</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(g)&#160;&#160;&#160;&#160;&#160;&#160;Brigham will be designated as operator of all operations for the Third Group of Well Units and the Parties&#8217; operations within each Well Unit shall be governed by a separate operating agreement in the form attached hereto as Exhibit D.&#160;&#160;Once a Well Unit has been designated by Brigham
such Well Unit shall be deemed subject to an Operating Agreement in the form attached hereto as Exhibit D.&#160;&#160;However, following the designation of each Well Unit, Brigham shall prepare and deliver to U.S. Energy the following documentation and pages for the Operating Agreement that governs all drilling, completion, workover and all other operations for such Well Unit: (i) a cover page describing the lands included within such Well Unit as the Contract Area for the Operating Agreement; (ii) multiple original
execution and acknowledgment pages for the Operating Agreement; (iii) the Exhibit A to the Operating Agreement with appropriate insertions reflecting the agreements set forth in this Agreement with respect to the Well Unit and participation percentages; and (iv) the Memorandum of Operating Agreement for such Operating Agreement in the form attached to the form Operating Agreement which is attached hereto as Exhibit D, completed to describe the lands included in the Well Unit and the participating parties. Prior
to the date that preparations for the drilling of the Initial Well are expected to commence, each Party shall execute and return to Brigham fully executed and completed duplicate originals of the execution pages and acknowledgment pages to both the Operating Agreement and the Memorandum of Operating Agreement and each Party shall incorporate all of the pages and documentation described in (i), (ii) and (iii) above into a copy of the form Operating Agreement which is attached hereto as Exhibit D which it shall
retain for its records.&#160;&#160;Each Party's completed copy of the Operating Agreement shall constitute a duplicate counterpart original of the Operating Agreement which governs the Party's&#160;&#160;operations within the applicable Well Unit.&#160;&#160;Once Brigham receives the duplicate original execution and acknowledgment pages from U.S. Energy, Brigham shall provide U.S. Energy with a copy of execution pages for Brigham.&#160;&#160;In the event that Brigham fails to timely send or U.S. Energy fails
to execute and return its duplicate original execution pages to Brigham (but without a diminution of Brigham&#8217;s obligation to timely send or either Party's obligation to so execute and return duplicate original signature pages to Brigham), the Parties shall nonetheless be bound by the terms of the Operating Agreement for such Well Unit, which terms shall be deemed to apply to the Parties as provided above.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(h)&#160;&#160;&#160;&#160;&#160;&#160;Upon the drilling and completion or plugging and abandonment of the Initial Well for a Well Unit, payment by U.S. Energy of all costs and expenses then due, and compliance by U.S. Energy of all of the terms and provisions of this Agreement and the applicable Operating Agreement, Brigham will assign
to U.S. Energy its interests in the applicable Well Unit utilizing the form of assignment attached hereto as Exhibit B.&#160;&#160;The assignment will be made with a by, through and under warranty and will only be subject to existing burdens.&#160;&#160;Some of the Brigham Properties that were acquired from third parties may be depth limited to the Bakken and the upper part of the Three Forks formations that were received by Brigham from the applicable third party.&#160;&#160;As to all other Brigham Properties
located within the applicable Well Unit, U.S. Energy will be assigned its Working Interest in all depths.</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Section 7.&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Significant Initial Well Operational Issues, Drilling and Completion Timing and Frac Stage Limitations</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">.</font></font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(a)&#160;&#160;&#160;&#160;&#160;&#160;In the event that prior to the completion of an Initial Well, Brigham encounters well problems that, in Brigham&#8217;s discretion, makes it unreasonable to continue drilling and/or completion operations for such well, then Brigham shall either:</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(i)&#160;&#160;&#160;&#160;&#160;&#160;Plug and abandon such well and commence operations in the same Well Unit for a replacement well within 90 days of such plugging; or</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(ii)&#160;&#160;&#160;&#160;&#160;&#160;Plug and abandon such Initial Well and not commence a replacement well.</font></div>
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<br></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">In the event that Brigham elects 7(a)(i) above, U.S. Energy shall have an election to participate in the replacement well which must be received by Brigham within forty-eight (48) hours of its receipt of Brigham&#8217;s written proposal to drill the replacement well; provided however, that in the event that U.S. Energy does not elect to
participate in the replacement well, U.S. Energy shall forfeit all rights to any interests in the Well Unit in which such replacement well is proposed to be drilled but such Initial Well shall still be counted as an Initial Well within the First Six Well Units, Second Group of Well Units or Third Group of Well Units, as applicable, and U.S. Energy shall not be entitled to participate in an additional Initial Well in replacement thereof.&#160;&#160;Nonetheless, all of the costs incurred by U.S. Energy in the drilling
and/or attempted completion of the Initial Well that is being replaced shall be considered as U.S. Energy Expenditures for purposes of the Payout calculation.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">In the event that U.S. Energy elects to participate in the replacement well, the replacement well shall be considered to be a continuation of the Initial Well and U.S. Energy&#8217;s Working Interest share of all of the costs and expenses incurred to attempt to drill and/or complete the original well, together with all of the costs incurred
to plug and abandon such original well and all of the costs and expenses incurred to drill and complete the replacement well shall be considered U.S. Energy Expenditures for the applicable Initial Well for purposes of the Payout calculation for the Initial Well.&#160;&#160;In the event that Brigham elects 7(a)(ii) above and plug and abandons the applicable Initial Well, the Initial Well shall be deemed to have been drilled and completed for purposes of this Agreement and U.S. Energy&#8217;s Working Interest share
of all of the costs related to the Initial Well, including the costs incurred to plug and abandon the Initial Well, shall be considered US Energy Expenditures for purposes of the Payout calculations.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(b)&#160;&#160;&#160;&#160;&#160;&#160;With respect to each Initial Well that is commenced pursuant to this Agreement, Brigham shall continue operations for such Initial Well with due diligence as a reasonable prudent operator until such Initial Well is either plugged and abandoned or completed as a producer; provided, however, that Brigham
may cease drilling of the Initial Well in either the vertical portion or the lateral if granite or other practially impenetrable substance, condition in the hole, or mechanical problem renders further drilling impractical.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(c)&#160;&#160;&#160;&#160;&#160;&#160;The Parties agree that completion operations for each Initial Well shall be commenced within sixty (60) days of the running of the liner to total depth in such Initial Well unless: (i) mutually agreed otherwise, or (ii) such delay is due to events or conditions that are outside of Brigham&#8217;s
control.</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(d)&#160;&#160;&#160;&#160;&#160;&#160;The Parties agree that no more than thirty two (32) swell packers shall be run in any of the Initial Wells that are drilled within the First Six Well Units and no more than forty (40) swell </font></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
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<div style="TEXT-ALIGN: center; WIDTH: 100%"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">-12-</font></div>
<div style="TEXT-ALIGN: center; WIDTH: 100%">
<hr style="COLOR: black" noshade size="2"></div></div>
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<div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div></div></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
<div style="TEXT-ALIGN: justify; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">packers may be run in any of the Initial Wells that are drilled within either the Second Group of Well Units or Third Group of Well Units, without the mutual agreement of both Parties otherwise.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Section 8.&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Subsequent Well Proposals</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">.</font></font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Except as may be necessary for lease maintenance purposes, neither U.S. Energy nor Brigham may propose a Subsequent Well within any Well Unit before January 1, 2011, unless mutually agreed to by the Parties.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Section 9.&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Well Cost Payment Obligations.</font></font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Concurrent with the execution of this Agreement, U.S. Energy shall pay Brigham the estimated costs expected to be incurred in the drilling and completion of the Brad Olson Well as reflected on the invoice provided to U.S. Energy.&#160;&#160;In addition, within twenty four hours of the execution of this Agreement, U.S. Energy shall pay
Brigham the estimated costs expected to be incurred in the drilling and completion of the BCD Farms Well, as reflected on the invoice provided to U.S. Energy.&#160;&#160;All other costs and expenses incurred under this Agreement shall be paid in accordance with the terms of the governing Operating Agreement.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Section 10.&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Calculating Payout and Accounting for Interim Production</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">.</font></font></div>
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<br></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Payout for the First Six Well Units and the Second Group of Well Units will be calculated as follows:</font></div>
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<table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<tr valign="top">
<td style="WIDTH: 18pt">
<div><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160; </font></div></td>
<td style="WIDTH: 18pt">
<div style="TEXT-INDENT: 0pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(a)</font></div></td>
<td>
<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">All U.S. Energy Expenditures for the Initial Wells included in the Well Calculation Group will be treated as negative numbers and all U.S. Energy Net Receipts for the Initial Wells included in the Well Calculation Group will be treated as positive numbers.</font></div></td></tr></table></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
<div>
<table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<tr valign="top">
<td style="WIDTH: 18pt">
<div><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160; </font></div></td>
<td style="WIDTH: 18pt">
<div style="TEXT-INDENT: 0pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(b)</font></div></td>
<td>
<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">When cumulative U.S. Energy Net Receipts for the Initial Wells included in the Well Calculation Group equals or exceeds cumulative U.S. Energy Expenditures for the Initial Wells included in the Well Calculation Group, Payout will have been achieved for such Well Calculation Group.</font></div></td></tr></table></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">For the Third Group of Well Units, Payout will be calculated separately for each Initial Well, as follows:</font></div>
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<div>
<table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<tr valign="top">
<td style="WIDTH: 18pt">
<div><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160; </font></div></td>
<td style="WIDTH: 18pt">
<div style="TEXT-INDENT: 0pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(a)</font></div></td>
<td>
<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">All U.S. Energy Expenditures for the Initial Well will be treated as negative numbers and all U.S. Energy Net Receipts for such Initial Well will be treated as positive numbers.</font></div></td></tr></table></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
<div>
<table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<tr valign="top">
<td style="WIDTH: 18pt">
<div><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160; </font></div></td>
<td style="WIDTH: 18pt">
<div style="TEXT-INDENT: 0pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(b)</font></div></td>
<td>
<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">When cumulative U.S. Energy Net Receipts for the Initial Well equals or exceeds cumulative U.S. Energy Expenditures for the Initial Well, Payout will have been achieved for such Initial Well.</font></div></td></tr></table></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">For purposes of calculating Payout, the Parties agree that U.S. Energy Expenditures shall not be deemed to have been paid by U.S. Energy to Brigham until they have been received by Brigham in its Austin, Texas offices or in Brigham&#8217;s bank account if paid by wire transfer.&#160;&#160;Revenues of U.S. Energy paid to U.S. Energy by
check from Brigham shall be deemed to have been received by U.S. Energy three business days after they are mailed to U.S. Energy by Brigham.&#160;&#160;Revenues of U.S. Energy paid to U.S. Energy by wire transfer from Brigham shall be deemed to have been received by </font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
<div style="TEXT-ALIGN: justify; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">U.S. Energy on the date that the wire transfer is received by U.S. Energy.&#160;&#160;In the event that U.S. Energy has elected to be paid directly by purchasers of the oil and/or gas produced from the Initial Wells, for purposes of calculating Payout, Brigham will assume that U.S. Energy has received payment at the same time that
Brigham receives its payment from the purchaser for its share of the production and Brigham may assume that U.S. Energy received the same unit price Brigham received for its volumes.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Forward sales, hedges, collars and/or other hedge type arrangements entered into by U.S. Energy shall not be taken into account in calculating Payout.&#160;&#160;In the event that U.S. Energy enters into any fixed price sales agreements for its share of production, it will be assumed that U.S. Energy has sold its share of production on
a monthly basis at unit prices equal to the monthly prices received by Brigham for its share of production from the same Initial Well.</font></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The Parties recognize that because Payout is calculated based upon U.S. Energy Expenditures and U.S. Energy Net Receipts, prior to the date that Payout has been reached for the applicable Well Calculation Group or Initial Well, as applicable, production will have been sold from the applicable Initial Well(s) for which U.S. Energy has not
yet received payment (the &#8220;Interim Production&#8221;).&#160;&#160;The Parties agree that, notwithstanding the date that Payout is reached or the effective date of the assignment by U.S. Energy of Brigham&#8217;s post Payout interests in the applicable Initial Well(s), the payments for the Interim Production and the expenses associated therewith shall be allocated between the Parties in accordance with their post Payout interests in the applicable Initial Well(s).</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Section 11.&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Conditions Precedent to Brigham Performance and Termination Rights</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">.</font></font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The obligation of Brigham under this Agreement to allow U.S. Energy to participate in the drilling of any particular Initial Well, and to receive assignment of an undivided share of Brigham&#8217;s interest in a Well Unit, is subject to the fulfillment of each of the following conditions, unless any one or more of same are waived, in whole
or in part, by Brigham:</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(a)&#160;&#160;&#160;&#160;&#160;&#160;Each and every representation of U.S. Energy under this Agreement shall be true and accurate in all material respects as of the date when made and shall be deemed to have been made again at and as of the time of the proposed drilling of each Initial Well, and shall at and as of the proposed drilling
of each Initial Well be true and accurate in all material respects except as to changes specifically contemplated by this Agreement or consented to by Brigham.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(b)&#160;&#160;&#160;&#160;&#160;&#160;U.S. Energy shall have performed and complied in all material respects with (or compliance therewith shall have been waived in writing by Brigham) each and every covenant, agreement and condition required by this Agreement to be performed or complied with by U.S. Energy, including without limitation
U.S. Energy shall have timely performed its funding and payment obligations under Section 8 hereof and the governing Operating Agreements.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(c)&#160;&#160;&#160;&#160;&#160;&#160;No suit, action or other proceedings shall, on the date of the proposed drilling of each Initial Well, be pending or threatened against U.S. Energy or Brigham before any court or governmental agency seeking to restrain, prohibit, or obtain damages or other relief in connection with the consummation
of the transactions contemplated by this Agreement, except to the extent that such suit, action or other proceedings arise, in whole or in part out of any action or inaction of Brigham in breach of or otherwise in derogation of this Agreement.</font></div>
<br>
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<div style="TEXT-ALIGN: center; WIDTH: 100%"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">-14-</font></div>
<div style="TEXT-ALIGN: center; WIDTH: 100%">
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<br>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Notwithstanding any provision hereof to the contrary, in the event U.S. Energy fails at any time or from time to time, within thirty (30) days after receipt of written notice of default from Brigham, to make any payment owing to Brigham hereunder or the governing Operating Agreements or to otherwise satisfy any funding obligation hereunder,
and the amount of such deficiency exceeds $100,000.00 in amount, in addition to and without limitation of any and all other rights and remedies Brigham may have in law or in equity for such breach, Brigham shall have the right, exercisable in its sole and absolute discretion, to terminate this Agreement, and U.S. Energy shall have no further rights under this Agreement of in the Brigham Properties other than those earned prior to such termination.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Section 12.&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Conditions Precedent to U.S. Energy Performance</font>.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The obligation of U.S. Energy under this Agreement to fund Initial Well drilling and completion costs as set forth in Sections 4, 5 and 6 above, is subject to the fulfillment of each of the following conditions, unless any one or more of same are waived, in whole or in part, by U.S. Energy:</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(a)&#160;&#160;&#160;&#160;&#160;&#160;Each and every representation of Brigham under this Agreement shall be true and accurate in all material respects as of the date when made and shall be deemed to have been made again at and as of the time of the proposed drilling of each Initial Well, and shall at and as of the proposed drilling
of each Initial Well be true and accurate in all material respects except as to changes specifically contemplated by this Agreement or consented to by U.S. Energy.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(b)&#160;&#160;&#160;&#160;&#160;&#160;Brigham shall have performed and complied in all material respects with (or compliance therewith shall have been waived by U.S. Energy) each and every material covenant, agreement and condition required by this Agreement to be performed or complied with by Brigham.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(c)&#160;&#160;&#160;&#160;&#160;&#160;No suit, action or other proceedings shall, on the date for initial funding as set forth in Section 9, be pending or threatened against U.S. Energy or Brigham before any court or governmental agency seeking to restrain, prohibit, or obtain damages or other relief in connection with the consummation
of the transactions contemplated by this Agreement, except to the extent that such suit, action or other proceedings arise, in whole or in part out of any action or inaction of U.S. Energy in breach of or otherwise in derogation of this Agreement.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Notwithstanding any provision hereof to the contrary, in the event Brigham fails at any time or from time to time, within thirty (30) days after receipt of written notice of default from U.S. Energy, to make any payment owing to U.S. Energy hereunder or the governing Operating Agreements or to otherwise satisfy any funding obligation hereunder,
and the amount of such deficiency exceeds $100,000.00 in amount, in addition to and without limitation of any and all other rights and remedies U.S. Energy may have in law or in equity for such breach, U.S. Energy shall have the right, exercisable in its sole and absolute discretion, to terminate this Agreement.</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Section 13.&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Indemnification for Commissions</font>.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Brigham agrees to indemnify and hold harmless U.S. Energy and it officers, directors, employees, agents, and representatives from and against any and all claims, obligations, actions,</font></div>
<br>
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<div style="TEXT-ALIGN: center; WIDTH: 100%"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">-15-</font></div>
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<br>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">liabilities, damages, or expenses of any kind or character arising out of or resulting from any agreement, arrangement or understanding alleged to have been made by, or on behalf of, Brigham with any broker or finder in connection with this Agreement or the transactions contemplated hereby.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">U.S. Energy agrees to indemnify and hold harmless Brigham and its officers, directors, employees, agents and representatives from and against any and all claims, obligations, actions, liabilities, damages, or expenses of any kind or character arising out of or resulting from any agreement, arrangement or understanding alleged to have been
made by, or on behalf of, any member of U.S. Energy with any broker or finder in connection with this Agreement or the transactions contemplated hereby.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Section 14.&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Non-Compete.</font></font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">During the Agreement Term and continuing for a period of two (2) years thereafter, unless Brigham agrees in writing otherwise, and except as provided in this Agreement, neither U.S. Energy, nor any Affiliate of U.S. Energy, nor any broker or other representative acting on behalf of U.S. Energy shall, own, purchase or otherwise acquire
any interest in the oil, gas and/or other minerals in, under or that may be produced from any lands located within the Rough Rider Project Area other than the interests acquired pursuant to the terms of this Agreement.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Section 15.&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Notices.</font></font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">All notices and other communications required under this Agreement shall (unless otherwise specifically provided herein) be in writing and be delivered personally, by recognized commercial courier or delivery service (which provides a receipt), by telex or telecopier (with receipt acknowledged), or by registered or certified mail (postage
prepaid), at the following addresses:</font></div>
<div style="TEXT-INDENT: 27pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">If to U.S. ENERGY:</font></div>
<div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">U.S. Energy Corp.</font></div>
<div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">877 N. 8<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">th</font> W.</font></div>
<div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Riverton, WY&#160;&#160;82501</font></div>
<div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Fax:&#160;&#160;(307) 857-3050</font></div>
<div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Phone:&#160;&#160;(307) 856-9271</font></div>
<div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Attention:&#160;&#160;Mr. Mark Larsen</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">If to BRIGHAM:</font></div>
<div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Brigham Oil &amp; Gas, L.P.</font></div>
<div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">6300 Bridge Point Parkway</font></div>
<div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Building 2, Suite 500</font></div>
<div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Austin, Texas&#160;&#160;78730</font></div>
<div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Fax: (512) 427-3400</font></div>
<div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Phone:&#160;&#160;(512) 427-3300</font></div>
<div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Attention:&#160;&#160;Mr. David Brigham</font></div>
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<br></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">and shall be considered delivered on the date of receipt.&#160;&#160;Either U.S. Energy or Brigham may specify as its proper address any other post office address within the continental limits of the United States</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">by giving notice to the other party, in the manner provided in this Section, at least two (2) business days prior to the effective date of such change of address.</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Section 16.&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Survival of Provisions</font>.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">All representations, warranties and indemnifications made herein by Brigham or U.S. Energy shall survive in perpetuity the expiration of the Agreement Term and any termination hereof under Section 10 or Section 11.</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Section 17.<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font><font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Disclaimer</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">.</font></font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The liabilities of the parties hereunder shall be several, not joint or collective.&#160;&#160;It is not the intention of the Parties to create, nor shall this Agreement be deemed as creating, a joint venture, or a mining, tax or other partnership or association or to render the parties liable as partners.</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Section 18.&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Miscellaneous Matters</font>.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">a.&#160;&#160;&#160;&#160;&#160;&#160;Prior to the drilling of an Initial Well within each of the Well Units that are the subject of this Agreement, neither U.S. Energy or Brigham shall assign or otherwise transfer any rights, interests or obligations under this Agreement to any third party without first obtaining the written consent
of the other, which consent may not be unreasonably withheld; provided that either of Brigham or U.S. Energy may freely transfer or otherwise dispose of all of its rights, interests and obligations hereunder (i) by sale or other transfer or disposition of all or substantially all of its assets (whether or not covered hereby) to an Affiliate; (ii) otherwise by merger, reorganization or consolidation; or (iii) to provide a security interest for purposes of obtaining financing.&#160;&#160;This Agreement shall be
binding upon and shall inure to the benefit of U.S. Energy and Brigham and their respective permitted successors and assigns.</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">b.&#160;&#160;&#160;&#160;&#160;&#160;Each Party shall bear and pay all expenses (including without limitation attorneys&#8217; fees) incurred by it in connection with the transaction contemplated by this Agreement.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">c.&#160;&#160;&#160;&#160;&#160;&#160;This Agreement contains the entire understanding of the Parties hereto with respect to subject matter hereof and supersedes all prior agreements, understandings, negotiations, and discussions among the Parties with respect to such subject matter.&#160;&#160;The descriptive headings contained in this
Agreement are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement.&#160;&#160;Within this Agreement words of any gender shall be held and construed to cover any other gender, and words in the singular shall be held and construed to cover the plural, unless the context otherwise requires.&#160;&#160;Time is of the essence in this Agreement.</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">d.&#160;&#160;&#160;&#160;&#160;&#160;This Agreement may be amended, modified, supplemented, restated or discharged (and provisions hereof may be waived) only by an instrument in writing signed by the Party against whom enforcement of the amendment, modification, supplement, restatement or discharge (or waiver) is sought.</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">e.&#160;&#160;&#160;&#160;&#160;&#160;THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO</font></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
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<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
<div style="TEXT-ALIGN: justify; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">PRINCIPLES OF CONFLICTS OF LAWS, EXCEPT THAT, TO THE EXTENT THAT THE LAW OF NORTH DAKOTA, WHERE THE BRIGHAM PROPERTIES ARE LOCATED, NECESSARILY GOVERNS, THE LAW OF NORTH DAKOTA SHALL APPLY.&#160;&#160;JURISDICTION AND VENUE SHALL BE IN THE COUNTY WHERE THE AFFECTED BRIGHAM PROPERTIES ARE LOCATED IN NORTH DAKOTA.</font></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">f.&#160;&#160;&#160;&#160;&#160;&#160;This Agreement may be executed in counterparts, all of which are identical and all of which constitute one and the same instrument.&#160;&#160;It shall not be necessary for Brigham and U.S. Energy to sign the same counterpart and signature pages from different counterparts may be combined to form
masters of this Agreement.</font></div>
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<br></div>
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<br></div>
<div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">This Agreement is executed by the parties hereto on the date set forth beneath the signature of each but is effective for reference and all other purposes as of August <font style="DISPLAY: inline; TEXT-DECORATION: underline">24</font>, 2009.</font></div>
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<td valign="top" width="11%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160; </font></td>
<td valign="top" width="89%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160; </font></td></tr><tr>
<td valign="top" width="11%" style="BORDER-BOTTOM: black 2px solid">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">By:</font></div></td>
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<TYPE>EX-10.2
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<FILENAME>exhibit10_2.htm
<DESCRIPTION>8-26-09 PRESS RELEASE
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 18pt; FONT-WEIGHT: bold">U.S. ENERGY CORP. ENTERS INTO</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 18pt; FONT-WEIGHT: bold">DRILLING PARTICIPATION AGREEMENT WITH BRIGHAM EXPLORATION COMPANY</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 18pt; FONT-WEIGHT: bold">IN THE WILLISTON BASIN</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">RIVERTON, Wyoming &#8211; August 26, 2009</font> &#8211; U.S. Energy Corp. (NASDAQ Capital Market: &#8220;USEG&#8221;) (&#8220;USE&#8221; or the &#8220;Company&#8221;), a natural resources exploration and development company with interests in molybdenum, oil and gas, geothermal, and real
estate assets, today announced that it has entered into a Drilling Participation Agreement (DPA) with Brigham Exploration Company (NASDAQ: BEXP) (&#8220;Brigham&#8221;) to earn working interests in up to fifteen 1,280 acre spacing units in Brigham&#8217;s Rough Rider project area located in Williams and McKenzie Counties of North Dakota.&#160;&#160;The terms of the DPA call for the drilling of up to 15 initial Bakken wells in 15 separate 1,280 acre spacing units.&#160;&#160;The ultimate number of wells to be
drilled in the units could reach 90.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt">Under the terms of the DPA, USE has committed to drilling six initial wells (and earning subsequent working interests in six 1,280 acre spacing units) and will have the option to commit to drilling four additional wells (and earning subsequent working interests in four additional 1,280 acre spacing units) after receiving notification of
the initial production (IP) rates from four of the first six initial wells drilled.&#160;&#160;If USE elects to drill the four additional wells, it will then have an option to participate and earn working interests in five additional wells and 1,280 acre spacing units after receiving notification of the IP for the fifth and sixth initial wells drilled in the first six well program.&#160;&#160;Upon the drilling and completion of the first or initial well in each 1,280 acre spacing unit, USE will earn 36% of Brigham&#8217;s
original working interest in the remaining acreage (or drilling locations) in each 1,280 acre unit.&#160;&#160;If USE participates in the drilling of the initial wells in all fifteen 1,280 acre spacing units, it will earn working interests in 19,200 gross acres in the Rough Rider project area.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">August&#160;&#160;26, 2009</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Page&#160;&#160;2 of 5</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt">USE has agreed to participate for 65% of Brigham&#8217;s original working interest in each initial well drilled in the first six well program.&#160;&#160;Upon receiving a pooled payout of all of the costs and expenses incurred to drill and complete the six initial wells in the six initial 1,280 acre spacing units, USE will assign back 35%
of its 65% of Brigham&#8217;s original working interest in the first well in each 1,280 acre spacing unit to Brigham.&#160;&#160;Following that, USE will own 42.25% of Brigham&#8217;s original working interest in the initial well in each 1,280 acre spacing unit.&#160;&#160;If USE elects to participate in the second group of four wells and spacing units, it will also be entitled to a pooled payout similar to the first six well program.&#160;&#160;If USE elects to participate in the third group of five wells and
spacing units, it will be entitled to an initial well by initial well per spacing unit payout before a 27.7% back in assignment to Brigham.</font></div>
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<br></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt">The drilling of the first two wells in the first group of six wells has already been commenced by Brigham.&#160;&#160;The Brad Olson 9-16 #1H is located in Williams County, North Dakota, approximately one-half mile to the west of the successful Olson 10-15 #1H well completed by Brigham in February 2009.&#160;&#160;The Olson 10-15 #1H well
came in at an early 24 hour IP rate of 1433 BOE per day.&#160;&#160;Similar to the Olson 10-15 #1H well, the Brad Olson 9-16 #1H is a long lateral well that has already reached a total measured depth of 20,500 feet.&#160;&#160;Brigham is now in the process of completing the well utilizing 28 frac stages at intervals of 400 feet.&#160;&#160;USE anticipates reporting an IP for the Brad Olson 9-16 #1H well in late September.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt">The BCD Farms 16-21 #1H well is now drilling forward at a vertical depth of 2,500 feet.&#160;&#160;It is also located in Williams County, North Dakota and it too will be a long lateral well (approximately 10,700 feet total vertical depth with a 9,100 foot horizontal lateral).&#160;&#160;Brigham anticipates that the BCD Farms 16-21 #1H well
will reach total measured depth by late September and also plans to complete the well with 28 frac stages.&#160;&#160;Both the Brad Olson 9-16 #1H and BCD Farms 16-21 #1H wells are targeting the Middle Bakken formation.&#160;&#160;All of the initial wells planned to be drilled in the initial 15 well/spacing unit program are anticipated to be completed with a minimum of 28 frac stages.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">August&#160;&#160;26, 2009</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Page&#160;&#160;3 of 5</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt">The drilling of wells three through six in the first group of six initial wells is anticipated to be completed by late November as Brigham and USE plan to add another rig to the program by mid-September.&#160;&#160;The drilling of each well typically takes 30 days while the completion typically takes 21-28 days.&#160;&#160;Brigham will
operate all of the wells.&#160;&#160;If USE elects to participate in all 15 initial wells and earns subsequent working interests in each 1,280 acre spacing unit, the Company will have earned the rights to drill up to 30 total wells in the Bakken formation and an additional 30 wells in the Three Forks formation, for a total of 60 wells, based on the current spacing in North Dakota.&#160;&#160;If the spacing is ultimately increased to three wells per 1,280 acre spacing unit, the potential number of drilling locations
could increase to 90.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt">Brigham recently announced the completion of two of its multi-staged fraced wells in North Dakota, the Strobeck 27-34 #1H well which was completed in the Three Forks formation in Mountrail County, North Dakota and the Anderson 28-33 #1H which was completed in the Bakken formation also in Mountrail County, North Dakota.&#160;&#160;These
two long lateral wells, which are not included in the DPA, came in at early 24 hour IP flow rates of 2021 BOE per day (Strobeck 27-24 #1H) and 2154 BOE per day (Anderson 28-33 #1H).&#160;&#160;The Strobeck well was completed with 20 frac stages and the Anderson well was completed with 24 frac stages.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt">USE expenditures are anticipated to approximate $17.6 million for the first six initial well program based on its, Brigham&#8217;s and other working interest partner&#8217;s anticipated participation in the currently identified spacing units.&#160;&#160;If working interest owners other than Brigham and USE do not participate in the wells
then that amount could increase.&#160;&#160;In the second groups of 4 and 5 wells that USE could elect to participate in respectively, Brigham will have the option to participate at a range of 15-50% in those wells.&#160;&#160;Prior to USE&#8217;s election to participate in those well groups, Brigham must notify USE of its participation percentage.&#160;&#160;If Brigham participates 15% in those well groups, USE can participate for 85% of Brigham&#8217;s original working interest.&#160;&#160;If Brigham participates
50% in those well groups, USE can participate for 50% of Brigham&#8217;s original working interest.&#160;&#160;Each participation amount for both Brigham and USE will be subject to dilution or expansion based on other working interest owners&#8217; participation in the initial wells and/or subsequent wells in each 1,280 acre spacing unit.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Page&#160;&#160;4 of 5</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt">&#8220;We are delighted to be teaming up with one of the best and most technologically advanced operators in the Bakken oil field&#8221;, stated Mark Larsen, President of U.S. Energy.&#160;&#160;&#8220;Brigham has proven itself to be one of the premier companies in the Williston Basin through the advancement of their multi-stage frac completions
and their consistent improvement of production rates.&#160;&#160;We look forward to a long term relationship with Brigham and developing low cost reserves well into the future,&#8221; he added.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt">&#8220;Our patient search for a sound investment in oil and gas has now come to light with todays announcement,&#8221; stated Keith Larsen, CEO of U.S. Energy Corp.&#160;&#160;&#8220;At a time when natural gas appears to be poised for an extended period of low prices our main focus has been to expand our oil production and reserves.&#160;&#160;This
agreement does just that by providing us with the potential to rapidly expand our oil production and increase our reserves by participating with an experienced operator that has a track record of lowering its finding and development costs.&#160;&#160;Furthermore, I am confident that our drilling schedule for the balance of 2009 will allow us to reach our corporate production goal of 7,000 MCFED or approximately 1,200 BOED by year end,&#8221; he added.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt">SMH Capital, an independent investment banking firm based in Houston, Texas acted as financial advisor to USE for this transaction.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 36pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt">* * * * *</font></div>
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<br></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Note Regarding BOE</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">In this press release, BOEs are derived by converting gas to oil in the ratio of one barrel of oil to six thousand cubic feet of gas (1 bbl:6 Mcf). Barrel of oil equivalent ("BOE") amounts may be misleading, particularly if used in isolation. A BOE conversion ratio of 1 bbl of oil to 6 Mcf of natural gas is based on an energy equivalency
conversion method primarily applicable at the burner tip and does not represent a value of equivalency at the well head.</font></div>
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<br></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">About Brigham Exploration</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-ALIGN: justify; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Brigham Exploration Company is a leading independent exploration and production company that applies 3-D seismic imaging and other advanced technologies to systematically explore for and develop onshore domestic oil and natural gas reserves. For more information about Brigham Exploration, please visit its website at www.bexp3d.com
or contact Investor Relations at 512-427-3444.</font></div>
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<br></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">About U.S. Energy Corp.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">U.S. Energy Corp. is a diversified natural resource company with interests in molybdenum, oil and gas, geothermal and real estate assets.&#160;&#160;The Company is headquartered in Riverton, Wyoming, and its common stock is listed on The NASDAQ Capital Market under the symbol &#8220;USEG&#8221;.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Press Release</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">August&#160;&#160;26, 2009</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Page&#160;&#160;5 of 5</font></div></font></div></div></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 36pt" align="left"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#160;</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 36pt" align="left"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Disclosure Regarding Mineral Resources Under SEC and Canadian Regulations; and Forward-Looking Statements</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The Company owns or may come to own stock in companies which are traded on foreign exchanges, and may have agreements with some of these companies to acquire and/or develop the Company&#8217;s mineral properties.&#160;&#160;An example is Sutter Gold Mining Inc.&#160;&#160;These other companies are subject to the reporting
requirements of other jurisdictions.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block">
<br></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">United States residents are cautioned that some of the information available about our mineral properties, which is reported by the other companies in foreign jurisdictions, may be materially different from what the Company is permitted to disclose in the United States.</font></div>
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<br></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">This news release includes statements which may constitute &#8220;forward-looking&#8221; statements, usually containing the words &#8220;believe,&#8221; &#8220;estimate,&#8221; &#8220;project,&#8221; &#8220;expect," or similar expressions.&#160;&#160;Forward looking statements in this release
relate to, among other things, USE&#8217;s drilling of wells pursuant to the terms of the DPA, its ownership interests in those wells and the costs it expects to incur in drilling those wells.&#160;&#160;There is no assurance that any of the wells USE drills under the terms of the DPA with Brigham will have results similar to those referenced in this press release or that any of the wells drilled with Brigham will be productive at all. </font><font style="FONT-STYLE: italic; DISPLAY: inline">These statements
are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995.&#160;&#160;Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements.&#160;&#160;Factors that would cause or contribute to such differences include, but are not limited to, future trends in mineral prices, the availability of capital, competitive factors, and other risks including those described in the Company&#8217;s
filings with the SEC, which are incorporated herein by reference.&#160;&#160;By making these forward-looking statements, the Company undertakes no obligation to update these statements for revision or changes after the date of this release.</font></font></div>
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<br></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">For further information on the differences between the reporting limitations of the United States, compared to reports filed in foreign jurisdictions, and also concerning forward-looking statements, please see the Company&#8217;s Form 10-K (&#8220;Disclosure Regarding Forward-Looking Statements&#8221;; &#8220;Disclosure
Regarding Mineral Resources under SEC and Canadian Regulation&#8221;; and &#8220;Risk Factors&#8221;); and similar disclosures in the Company&#8217;s Forms 10-Q.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 36pt" align="center"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">* * * * *</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 36pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">For further information, please contact:</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Reggie Larsen</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Director of Investor Relations</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">U.S. Energy Corp.</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">1-800-776-9271</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Reggie@usnrg.com</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">1-403-538-4845</font></div>
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">nhurst@equicomgroup.com</font></div>
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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
