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Shareholders' Equity
 6 Months Ended
Jun. 30, 2011
Equity [Abstract]  
Shareholders' Equity
9)      Shareholders' Equity
 
Common Stock

During the six months ended June 30, 2011, the Company issued 170,781 shares of common stock.  These shares consist of (a) 40,000 shares issued to officers of the Company pursuant to the 2001 Stock Compensation Plan; (b) 32,896 shares issued as a result of warrants being exercised by directors of the Company and (c) 97,885 shares as a result of the exercise of options by employees of the Company.

The following table details the changes in common stock during the six months ended June 30, 2011:
 
(Amounts in thousands, except for share amounts)
 
         
Additional
 
   
Common Stock
  
Paid-In
 
   
Shares
  
Amount
  
Capital
 
           
 Balance December 31, 2010
  27,068,610  $271  $121,062 
 2001 stock compensation plan
  40,000   --   252 
 Exercise of employee stock options
  97,885   1   (226)
 Exercise of outside director warrants
  32,896   --   39 
 Expense of employee options vesting
  --   --   505 
 Expense of outside director warrants vesting
  --   --   (16)
 Balance June 30, 2011
  27,239,391  $272  $121,616 
              
 
Stock Option Plans

The Board of Directors adopted, and the shareholders approved, the U.S. Energy Corp. 2001 Incentive Stock Option Plan (the "2001 ISOP") for the benefit of the Company's employees.  The 2001 ISOP reserves for issuance shares of the Company's common stock equal to 25% of the Company's shares of common stock issued and outstanding at any time.  The 2001 ISOP has a term of 10 years, and expires on December 6, 2011.  Any options issued prior to that date will survive to their expiration date which cannot exceed a ten year period from date of grant and will be subject to vesting and forfeiture provisions at date of grant.

During the three and six months ended June 30, 2011, we recognized $254,000 and $505,000, respectively, in compensation expense related to employee options.  We will recognize an additional $444,000 in expense over the remaining vesting period of the outstanding options of 0.47 years.  We compute the fair values of options granted using the Black-Scholes pricing model.  As a result of the exercise of 368,136 options held by officers and employees, 97,885 shares of common stock were issued during the six months ended June 30, 2011.

Warrants to Others

From time to time we issue stock purchase warrants to non-employees for services.  During the six months ended June 30, 2011, we issued 20,000 warrants to independent directors.  The warrants were issued at the closing price of $4.19 on the date of grant, vest over a three year period and expire ten years from the date of grant or one year after the Board member no longer serves on the Board.  The warrants were valued under Black-Scholes using a risk free interest rate of 1.765%, expected life of 6 years and expected volatility of 59.64%.

During the three months ended June 30, 2011, we recorded $13,000 in expense for warrants issued to third parties.  Due to an adjustment made during the first quarter of 2011 to the expected forfeiture rate of the outstanding, unvested warrants, we recorded a credit to expense of $16,000 for warrants issued to third parties during the six months ended June 30, 2011.  We will recognize an additional $76,000 in expense over the vesting period of the outstanding warrants.  During the six months ended June 30, 2011, we issued 32,896 shares of common stock to directors of the Company as the result of the exercise of 95,000 outstanding warrants.
 
The following table represents the activity in employee stock options and non-employee stock purchase warrants for the six months ended June 30, 2011:

   
June 30, 2011
 
   
Employee Stock Options
  
Stock Purchase Warrants
 
      
Weighted
     
Weighted
 
      
Average
     
Average
 
      
Exercise
     
Exercise
 
   
Options
  
Price
  
Warrants
  
Price
 
              
Outstanding balance at December 31, 2010
  3,011,647  $3.87   320,000  $2.95 
Granted
  -  $-   20,000  $4.19 
Forfeited
  -  $-   (20,000) $2.52 
Expired
  -  $-   -  $- 
Exercised
  (368,136) $3.94   (95,000) $2.99 
Outstanding at June 30, 2011
  2,643,511  $3.86   225,000  $3.08 
Exercisable at June 30, 2011
  2,246,012  $3.87   185,001  $2.93 
                  
Weighted Average Remaining Contractual Life - Years
   4.94       3.22 
                  
Aggregate intrinsic value of options / warrants outstanding
  $1,932,000      $275,000