☒
|
Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
|
For the quarterly period ended September 30, 2015 or
|
|
☐
|
Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
|
For the transition period from ___________ to ____________
|
U.S. ENERGY CORP.
|
(Exact name of registrant as specified in its charter)
|
Wyoming
|
83-0205516
|
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
|
incorporation or organization)
|
Identification No.)
|
|
877 North 8
th
West, Riverton, WY
|
82501
|
|
(Address of principal executive offices)
|
(Zip Code)
|
|
Registrant's telephone number, including area code:
|
(307) 856-9271
|
Not Applicable
|
(Former name, address and fiscal year, if changed since last report)
|
Large accelerated filer
☐
|
Accelerated filer
☒
|
Non-accelerated filer
☐
(Do not check if a smaller reporting company)
|
Smaller reporting company
☐
|
Page No.
|
||
PART I.
|
FINANCIAL INFORMATION
|
|
Item 1.
|
Financial Statements (unaudited)
|
|
Condensed Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014
|
4-5
|
|
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2015 and 2014
|
6-7
|
|
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2015 and 2014
|
8
|
|
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2015 and 2014
|
9-10
|
|
Notes to Condensed Consolidated Financial Statements
|
11-25
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
26-40
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
41
|
Item 4.
|
Controls and Procedures
|
42
|
PART II.
|
OTHER INFORMATION
|
|
Item 1.
|
Legal Proceedings
|
43
|
Item 1A.
|
Risk Factors
|
43
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
43
|
Item 3.
|
Defaults Upon Senior Securities
|
43
|
Item 4.
|
Mine Safety Disclosures
|
43
|
Item 5.
|
Other Information
|
43
|
Item 6.
|
Exhibits
|
43
|
Signatures
|
44
|
|
Certifications
|
See Exhibits
|
U.S. ENERGY CORP.
|
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||||
ASSETS
|
||||||||
(Unaudited)
|
||||||||
(In thousands, except shares)
|
||||||||
September 30,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
3,877
|
$
|
4,010
|
||||
Available for sale securities
|
258
|
25
|
||||||
Accounts receivable trade
|
1,085
|
3,177
|
||||||
Commodity risk management asset
|
1,002
|
--
|
||||||
Other current assets
|
227
|
288
|
||||||
Total current assets
|
6,449
|
7,500
|
||||||
Oil and gas properties under full cost method,
|
||||||||
Proved oil and gas properties
|
109,054
|
147,486
|
||||||
Unproved oil and gas properties
|
8,196
|
10,188
|
||||||
Exploratory wells in progress
|
--
|
2,357
|
||||||
less depletion, depreciation and amortization
|
(78,867
|
)
|
(71,762
|
)
|
||||
Net oil and gas properties
|
38,383
|
88,269
|
||||||
Undeveloped mining claims
|
21,942
|
21,942
|
||||||
Property, plant and equipment, net of
|
||||||||
accumulated depreciation of $4,500 and $4,404
|
3,666
|
3,942
|
||||||
Other assets
|
1,062
|
1,870
|
||||||
Total assets
|
$
|
71,502
|
$
|
123,523
|
U.S. ENERGY CORP.
|
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
(Unaudited)
|
||||||||
(In thousands, except shares)
|
||||||||
September 30,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
8,334
|
$
|
7,441
|
||||
Accrued compensation
|
1,194
|
441
|
||||||
Current portion of debt
|
6,000
|
--
|
||||||
Other current liabilities
|
72
|
84
|
||||||
Total current liabilities
|
15,600
|
7,966
|
||||||
Noncurrent liabilities:
|
||||||||
Long-term debt
|
--
|
6,000
|
||||||
Asset retirement obligations
|
1,230
|
1,133
|
||||||
Other accrued liabilities
|
551
|
1,029
|
||||||
Total noncurrent liabilities
|
1,781
|
8,162
|
||||||
Commitments and contingencies:
|
||||||||
Shareholders' equity:
|
||||||||
Common stock, $0.01 par value; unlimited shares authorized
|
||||||||
28,351,022 shares issued and 28,110,311 outstanding
|
||||||||
at September 30, 2015, 28,047,661 issued and outstanding
|
||||||||
at December 31, 2014
|
281
|
280
|
||||||
Additional paid-in capital
|
124,344
|
123,980
|
||||||
Accumulated deficit
|
(70,443
|
)
|
(16,809
|
)
|
||||
Other comprehensive loss
|
(61
|
)
|
(56
|
)
|
||||
Total shareholders' equity
|
54,121
|
107,395
|
||||||
Total liabilities and shareholders' equity
|
$
|
71,502
|
$
|
123,523
|
U.S. ENERGY CORP.
|
||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
(In thousands except share and per share data)
|
||||||||||||||||
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Revenues:
|
||||||||||||||||
Oil sales
|
$
|
2,258
|
$
|
8,682
|
$
|
7,489
|
$
|
24,205
|
||||||||
Gas sales
|
281
|
870
|
881
|
2,223
|
||||||||||||
NGL sales
|
83
|
376
|
216
|
884
|
||||||||||||
Total revenues
|
2,622
|
9,928
|
8,586
|
27,312
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Oil and gas
|
1,565
|
3,028
|
5,438
|
7,586
|
||||||||||||
Oil and gas depreciation, depletion
|
||||||||||||||||
and amortization
|
2,176
|
4,621
|
7,105
|
11,498
|
||||||||||||
Impairment of oil and gas properties
|
21,446
|
--
|
43,894
|
--
|
||||||||||||
Water treatment plant
|
470
|
491
|
1,383
|
1,400
|
||||||||||||
Mineral holding costs
|
365
|
439
|
912
|
944
|
||||||||||||
General and administrative
|
1,824
|
2,030
|
4,524
|
5,169
|
||||||||||||
Total operating expenses
|
27,846
|
10,609
|
63,256
|
26,597
|
||||||||||||
(Loss) income from operations
|
(25,224
|
)
|
(681
|
)
|
(54,670
|
)
|
715
|
|||||||||
Other income and (expenses):
|
||||||||||||||||
Realized gain (loss) on risk
|
||||||||||||||||
management activities
|
33
|
(84
|
)
|
(106
|
)
|
(616
|
)
|
|||||||||
Unrealized gain on risk
|
||||||||||||||||
management activities
|
1,337
|
780
|
1,002
|
369
|
||||||||||||
Gain on the sale of assets
|
41
|
--
|
57
|
28
|
||||||||||||
Miscellaneous income (expense)
|
163
|
(10
|
)
|
211
|
58
|
|||||||||||
Interest income
|
66
|
1
|
68
|
3
|
||||||||||||
Interest expense
|
(67
|
)
|
(69
|
)
|
(196
|
)
|
(314
|
)
|
||||||||
Total other income and (expenses)
|
1,573
|
618
|
1,036
|
(472
|
)
|
|||||||||||
(Loss) income before income taxes
|
(23,651
|
)
|
(63
|
)
|
(53,634
|
)
|
243
|
U.S. ENERGY CORP.
|
||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
(In thousands except share and per share data)
|
||||||||||||||||
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Income taxes:
|
||||||||||||||||
Current (provision for)
|
--
|
--
|
--
|
--
|
||||||||||||
Deferred benefit from
|
--
|
--
|
--
|
--
|
||||||||||||
--
|
--
|
--
|
--
|
|||||||||||||
Net (loss) income
|
$
|
(23,651
|
)
|
$
|
(63
|
)
|
$
|
(53,634
|
)
|
$
|
243
|
|||||
(Loss) income per share basic and diluted
|
$
|
(0.84
|
)
|
$
|
-
|
$
|
(1.91
|
)
|
$
|
0.01
|
||||||
Weighted average shares outstanding
|
||||||||||||||||
Basic
|
28,051,066
|
27,899,505
|
28,048,808
|
27,808,231
|
||||||||||||
Diluted
|
28,051,066
|
27,899,505
|
28,048,808
|
28,200,388
|
U.S. ENERGY CORP.
|
||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF
|
||||||||||||||||
COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
(In thousands)
|
||||||||||||||||
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Net (loss) income:
|
$
|
(23,651
|
)
|
$
|
(63
|
)
|
$
|
(53,634
|
)
|
$
|
243
|
|||||
Other comprehensive (loss):
|
||||||||||||||||
Marketable securities, net of tax
|
(10
|
)
|
(5
|
)
|
(5
|
)
|
(34
|
)
|
||||||||
Total comprehensive (loss) income
|
$
|
(23,661
|
)
|
$
|
(68
|
)
|
$
|
(53,639
|
)
|
$
|
209
|
U.S. ENERGY CORP.
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(Unaudited)
|
||||||||
(In thousands)
|
||||||||
For the nine months ended September 30,
|
||||||||
2015
|
2014
|
|||||||
Cash flows from operating activities:
|
||||||||
Net (loss) income
|
$
|
(53,634
|
)
|
$
|
243
|
|||
Adjustments to reconcile net (loss) income to
|
||||||||
net cash provided by operations
|
||||||||
Depreciation, depletion & amortization
|
7,306
|
11,702
|
||||||
Change in fair value of commodity price
|
||||||||
risk management activities, net
|
(1,002
|
)
|
(369
|
)
|
||||
Impairment of oil and gas properties
|
43,894
|
--
|
||||||
(Gain) on receipt of Anfield Resources stock
|
(238
|
)
|
--
|
|||||
(Gain) on sale of assets
|
(57
|
)
|
(28
|
)
|
||||
Noncash compensation
|
149
|
937
|
||||||
Noncash services
|
50
|
76
|
||||||
Accounts payable
|
2,548
|
48
|
||||||
Overpayment by operators
|
(330
|
)
|
1,503
|
|||||
Net changes in assets and liabilities
|
2,560
|
18
|
||||||
Net cash provided by operating activities
|
1,246
|
14,130
|
||||||
Cash flows from investing activities:
|
||||||||
Acquisition and development of oil and gas properties
|
(3,876
|
)
|
(24,846
|
)
|
||||
Acquisition of property, plant and equipment
|
(4
|
)
|
(1,213
|
)
|
||||
Proceeds from sale of oil and gas properties
|
--
|
11,515
|
||||||
Proceeds from settlement of lawsuit
|
1,500
|
--
|
||||||
Proceeds from sale of property and equipment
|
136
|
28
|
||||||
Net change in restricted investments
|
885
|
(51
|
)
|
|||||
Net cash (used in) investing activities:
|
(1,359
|
)
|
(14,567
|
)
|
U.S. ENERGY CORP.
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(Unaudited)
|
||||||||
(In thousands)
|
||||||||
For the nine months ended September 30,
|
||||||||
2015
|
2014
|
|||||||
Cash flows from financing activities:
|
||||||||
Issuance of common stock
|
--
|
(55
|
)
|
|||||
Cancellation of common stock
|
(20
|
)
|
--
|
|||||
Proceeds from new debt
|
--
|
8,000
|
||||||
Repayments of debt
|
--
|
(9,000
|
)
|
|||||
Net cash provided by (used in) financing activities
|
(20
|
)
|
(1,055
|
)
|
||||
Net (decrease) in cash and cash equivalents
|
(133
|
)
|
(1,492
|
)
|
||||
Cash and cash equivalents at beginning of period
|
4,010
|
5,855
|
||||||
Cash and cash equivalents at end of period
|
$
|
3,877
|
$
|
4,363
|
||||
Supplemental disclosures:
|
||||||||
Interest paid
|
$
|
129
|
$
|
245
|
||||
Non-cash investing and financing activities:
|
||||||||
Acquisition and development of oil and gas
|
||||||||
properties through accounts payable
|
$
|
1,325
|
$
|
2,781
|
||||
Increase in oil and gas properties
|
||||||||
through asset retirement obligations
|
$
|
62
|
$
|
243
|
(In thousands)
|
||||||||
September 30,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Costs associated with Mount Emmons
|
||||||||
beginning of year
|
$
|
21,942
|
$
|
20,739
|
||||
Property purchase
(1)
|
--
|
1,203
|
||||||
Costs at the end of the period
|
$
|
21,942
|
$
|
21,942
|
(In thousands)
|
||||||||
September 30,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Property, plant and equipment
|
$
|
8,166
|
$
|
8,346
|
||||
Less accumulated depreciation
|
(4,500
|
)
|
(4,404
|
)
|
||||
Net book value
|
$
|
3,666
|
$
|
3,942
|
(In thousands)
|
||||||||
September 30,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Beginning asset retirement obligation
|
$
|
1,133
|
$
|
812
|
||||
Accretion of discount
|
35
|
40
|
||||||
Liabilities incurred
|
62
|
310
|
||||||
Liabilities settled
|
--
|
(29
|
)
|
|||||
Ending asset retirement obligation
|
$
|
1,230
|
$
|
1,133
|
||||
Mineral properties
|
$
|
200
|
$
|
187
|
||||
Oil and Gas wells
|
1,030
|
946
|
||||||
Ending asset retirement obligation
|
$
|
1,230
|
$
|
1,133
|
Quantity
|
|||||||||||||
Settlement Period
|
Counterparty
|
Basis
|
(Bbls/day)
|
Strike Price
|
|||||||||
Crude Oil Costless Collar
|
|||||||||||||
05/01/15 - 12/31/15
|
Wells Fargo
|
WTI
|
500
|
Put:
|
$
|
45.00
|
|||||||
Call:
|
$
|
58.79
|
|||||||||||
Crude Oil Costless Collar
|
|||||||||||||
01/01/16 - 06/30/16
|
Wells Fargo
|
WTI
|
350
|
Put:
|
$
|
57.50
|
|||||||
Call:
|
$
|
66.80
|
|||||||||||
Crude Oil Costless Collar
|
|||||||||||||
07/01/16 - 12/31/16
|
Wells Fargo
|
WTI
|
300
|
Put:
|
$
|
50.00
|
|||||||
Call:
|
$
|
65.25
|
As of September 30, 2015
|
||||||||||||||
(In thousands)
|
||||||||||||||
Underlying Commodity
|
Location on Balance Sheet
|
Gross amounts of recognized assets and liabilities
|
Gross amounts offset in the condensed consolidated balance sheet
|
Net amounts of assets and liabilities presented in the condensed consolidated balance sheet
|
||||||||||
Crude oil derivative contract
|
Current assets
|
$
|
1,152
|
$
|
(150
|
)
|
$
|
1,002
|
||||||
Crude oil derivative contract
|
Current liabilities
|
$
|
150
|
$
|
(150
|
)
|
$
|
--
|
(In thousands)
|
(In thousands)
|
|||||||||||||||
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Realized gain (loss) on risk management activities
|
$
|
33
|
$
|
(84
|
)
|
$
|
(106
|
)
|
$
|
(616
|
)
|
|||||
Realized gain on risk management activities
|
$
|
1,337
|
$
|
780
|
$
|
1,002
|
$
|
369
|
||||||||
Total realized and unrealized risk management gain (loss)
|
$
|
1,370
|
$
|
696
|
$
|
896
|
$
|
(247
|
)
|
·
|
Level 1 - Quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
·
|
Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and model-derived valuations whose inputs or significant value drivers are observable.
|
·
|
Level 3 - Significant inputs to the valuation model are unobservable.
|
(In thousands)
|
||||||||||||||||
Fair Value Measurements at September 30, 2015 Using
|
||||||||||||||||
Description
|
September 30, 2015
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||||||
Commodity risk management assets
|
$
|
1,002
|
$
|
--
|
$
|
1,002
|
$
|
--
|
||||||||
Available for sale securities
|
$
|
258
|
$
|
20
|
$
|
--
|
$
|
238
|
||||||||
Total assets
|
$
|
1,260
|
$
|
20
|
$
|
1,002
|
$
|
238
|
||||||||
Commodity risk management liability
|
$
|
--
|
$
|
--
|
$
|
--
|
$
|
--
|
||||||||
Executive retirement program liability
|
786
|
$
|
--
|
$
|
--
|
$
|
786
|
|||||||||
Total liabilities
|
$
|
786
|
$
|
--
|
$
|
--
|
$
|
786
|
||||||||
Fair Value Measurements at December 31, 2014 Using
|
||||||||||||||||
Description
|
December 31, 2014
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||||||
Available for sale securities
|
$
|
25
|
$
|
25
|
$
|
--
|
$
|
--
|
||||||||
Total assets
|
$
|
25
|
$
|
25
|
$
|
--
|
$
|
--
|
||||||||
Executive retirement program liability
|
$
|
1,309
|
$
|
--
|
$
|
--
|
$
|
1,309
|
||||||||
Total liabilities
|
$
|
1,309
|
$
|
--
|
$
|
--
|
$
|
1,309
|
(Amounts in thousands, except for share amounts)
|
||||||||||||
Additional
|
||||||||||||
Common Stock
|
Paid-In
|
|||||||||||
Shares
|
Amount
|
Capital
|
||||||||||
Balance January 1, 2015
|
28,047,661
|
$
|
280
|
$
|
123,980
|
|||||||
Restricted shares activity
|
303,361
|
1
|
33
|
|||||||||
Stock-based compensation
|
--
|
--
|
331
|
|||||||||
Balance September 30, 2015
|
28,351,022
|
$
|
281
|
$
|
124,344
|
Restricted Shares
|
Weighted-average grant-date fair value
|
|||||||
Non-vested at beginning of year
|
--
|
$
|
--
|
|||||
Granted
|
340,711
|
1.22
|
||||||
Vested and issued
|
(62,650
|
)
|
0.54
|
|||||
Vested and cancelled
|
(37,350
|
)
|
0.54
|
|||||
Non-vested at September 30, 2015
|
240,711
|
$
|
1.50
|
Employee Stock Options
|
Director Stock Options
|
|||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||
Average
|
Average
|
|||||||||||||||
Exercise
|
Exercise
|
|||||||||||||||
Options
|
Price
|
Options
|
Price
|
|||||||||||||
Outstanding balance at December 31, 2014
|
2,097,413
|
$
|
3.82
|
178,666
|
$
|
3.28
|
||||||||||
Granted
|
340,711
|
$
|
1.50
|
--
|
$
|
--
|
||||||||||
Forfeited
|
--
|
$
|
--
|
--
|
$
|
--
|
||||||||||
Expired
|
--
|
$
|
--
|
--
|
$
|
--
|
||||||||||
Exercised
|
--
|
$
|
--
|
--
|
$
|
--
|
||||||||||
Outstanding at September 30, 2015
|
2,438,124
|
$
|
3.50
|
178,666
|
$
|
3.28
|
||||||||||
Exercisable at September 30, 2015
|
2,167,413
|
$
|
3.74
|
129,666
|
$
|
3.21
|
||||||||||
Weighted Average Remaining Contractual Life - Years
|
3.77
|
7.14
|
||||||||||||||
Aggregate intrinsic value of options outstanding ($ Thousands)
|
$
|
--
|
$
|
--
|
(In thousands)
|
(In thousands)
|
|||||||||||||||
For the three months ended September 30,
|
For the nine months ended September 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Revenues:
|
||||||||||||||||
Oil and gas
|
$
|
2,622
|
$
|
9,928
|
$
|
8,586
|
$
|
27,312
|
||||||||
Total revenues
|
2,622
|
9,928
|
8,586
|
27,312
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Oil and gas
|
25,187
|
7,649
|
56,437
|
19,084
|
||||||||||||
Mineral properties
|
835
|
930
|
2,295
|
2,344
|
||||||||||||
Total operating expenses
|
26,022
|
8,579
|
58,732
|
21,428
|
||||||||||||
Interest expense:
|
||||||||||||||||
Oil and gas
|
56
|
93
|
201
|
307
|
||||||||||||
Mineral properties
|
--
|
--
|
--
|
--
|
||||||||||||
Total interest expense
|
56
|
93
|
201
|
307
|
||||||||||||
Operating income (loss)
|
||||||||||||||||
Oil and gas
|
$
|
(22,621
|
)
|
$
|
2,186
|
$
|
(48,052
|
)
|
$
|
7,921
|
||||||
Mineral properties
|
(835
|
)
|
(930
|
)
|
(2,295
|
)
|
(2,344
|
)
|
||||||||
Operating income (loss) from identified segments
|
(23,456
|
)
|
1,256
|
(50,347
|
)
|
5,577
|
||||||||||
|
||||||||||||||||
General and administrative expenses
|
(1,824
|
)
|
(2,030
|
)
|
(4,524
|
)
|
(5,169
|
)
|
||||||||
Add back interest expense
|
56
|
93
|
201
|
307
|
||||||||||||
Other revenues and expenses
|
1,573
|
618
|
1,036
|
(472
|
)
|
|||||||||||
Income (loss) before income taxes
|
$
|
(23,651
|
)
|
$
|
(63
|
)
|
$
|
(53,634
|
)
|
$
|
243
|
|||||
Depreciation depletion and amortization expense:
|
||||||||||||||||
Oil and gas
|
$
|
2,176
|
$
|
4,621
|
$
|
7,105
|
$
|
11,498
|
||||||||
Mineral properties
|
31
|
31
|
93
|
92
|
||||||||||||
Corporate
|
36
|
37
|
108
|
112
|
||||||||||||
Total depreciation depletion
|
||||||||||||||||
amortization expense
|
$
|
2,243
|
$
|
4,689
|
$
|
7,306
|
$
|
11,702
|
(In thousands)
|
||||||||
September 30,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Assets by segment
|
||||||||
Oil and gas
|
$
|
43,389
|
$
|
92,020
|
||||
Mineral
|
21,944
|
21,942
|
||||||
Corporate
|
6,169
|
9,561
|
||||||
Total assets
|
$
|
71,502
|
$
|
123,523
|
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Net (loss) income
|
$
|
(23,651
|
)
|
$
|
(63
|
)
|
$
|
(53,634
|
)
|
$
|
243
|
|||||
Basic weighted-average common shares outstanding
|
28,051,066
|
27,899,505
|
28,048,808
|
27,808,231
|
||||||||||||
Add: dilutive effect of stock options
|
--
|
--
|
--
|
392,157
|
||||||||||||
Add: dilutive effect of unvested restricted stock
|
--
|
--
|
--
|
--
|
||||||||||||
Diluted weighted-average common shares outstanding
|
28,051,066
|
27,899,505
|
28,048,808
|
28,200,388
|
||||||||||||
Basic net (loss) income per share
|
$
|
(0.84
|
)
|
$
|
(0.00
|
)
|
$
|
(1.91
|
)
|
$
|
0.01
|
|||||
Diluted net (loss) income per share
|
$
|
(0.84
|
)
|
$
|
(0.00
|
)
|
$
|
(1.91
|
)
|
$
|
0.01
|
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Weighted-average anti-dilutive stock options
|
2,616,790
|
1,067,341
|
2,615,542
|
1,059,176
|
||||||||||||
Weighted-average anti-dilutive restricted stock awards
|
334,189
|
--
|
239,829
|
--
|
||||||||||||
2,950,979
|
1,067,341
|
2,855,371
|
1,059,176
|
(In thousands)
|
||||||||
September 30,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Proved oil and gas properties
|
$
|
30,187
|
$
|
75,724
|
||||
Unproved oil and gas properties
|
8,196
|
10,188
|
||||||
Exploratory wells in progress
|
--
|
2,357
|
||||||
Undeveloped mining properties
|
21,942
|
21,942
|
||||||
$
|
60,325
|
$
|
110,211
|
September 30,
|
||||||||||||||||
2015
|
2014
|
|||||||||||||||
Gross
|
Net
(1)
|
Gross
|
Net
(1)
|
|||||||||||||
Williston Basin:
|
||||||||||||||||
Productive wells
|
109.00
|
10.33
|
94.00
|
10.18
|
||||||||||||
Wells being drilled or awaiting completion
|
7.00
|
0.01
|
6.00
|
0.09
|
||||||||||||
South Texas:
|
||||||||||||||||
Productive wells
|
37.00
|
9.99
|
33.00
|
8.89
|
||||||||||||
Wells being drilled or awaiting completion
|
--
|
--
|
2.00
|
0.63
|
||||||||||||
Gulf Coast:
|
||||||||||||||||
Productive wells
|
3.00
|
0.56
|
3.00
|
0.56
|
||||||||||||
Wells being drilled or awaiting completion
|
--
|
--
|
--
|
--
|
||||||||||||
Total:
|
||||||||||||||||
Productive wells
|
149.00
|
20.88
|
130.00
|
19.63
|
||||||||||||
Wells being drilled or awaiting completion
|
7.00
|
0.01
|
8.00
|
0.72
|
(1)
|
Net working interests may vary over time under the terms of the applicable contracts.
|
Williston Basin
|
South Texas
|
Gulf Coast
|
Total
|
|||||||||||||
First Nine Months of 2015 Production
|
||||||||||||||||
Oil (Bbl)
|
129,010
|
44,259
|
43
|
173,312
|
||||||||||||
Gas (Mcf)
|
66,297
|
115,377
|
138,819
|
320,493
|
||||||||||||
NGLs (Bbl)
|
10,440
|
11,350
|
--
|
21,790
|
||||||||||||
Equivalent (BOE)
|
150,500
|
74,838
|
23,180
|
248,518
|
||||||||||||
Avg. Daily Equivalent (BOE/d)
|
551
|
274
|
85
|
910
|
||||||||||||
Relative percentage
|
60.6
|
%
|
30.1
|
%
|
9.3
|
%
|
100
|
%
|
1.
|
$750,000 in Anfield common shares upon closing of the Anfield-Uranium One Transaction;
|
2.
|
$750,000 in Anfield common shares on the first anniversary of the closing of the Anfield-Uranium One Transaction;
|
3.
|
$1.0 million in Anfield common shares on the second anniversary of the closing of the Anfield-Uranium One Transaction;
|
4.
|
$2.5 million in cash paid upon 18 months of continuous commercial production; and
|
5.
|
$2.5 million in cash paid upon 36 months of continuous commercial production.
|
For the Three Months Ended
|
||||||||||||||||
September 30,
2015 |
June 30,
2015 |
March 31,
2015 |
December 31,
2014 |
|||||||||||||
(in thousands, except for production data)
|
||||||||||||||||
Production (BOE)
|
80,673
|
81,618
|
86,227
|
101,265
|
||||||||||||
Oil, gas and NGL production revenue
|
$
|
2,622
|
$
|
3,285
|
$
|
2,679
|
$
|
5,067
|
||||||||
Unrealized and realized derivative gain (loss)
|
$
|
33
|
$
|
(297
|
)
|
$
|
(177
|
)
|
$
|
829
|
||||||
Impairment of oil and gas properties
|
$
|
21,446
|
$
|
3,208
|
$
|
19,240
|
$
|
--
|
||||||||
Lease operating expense
|
$
|
1,324
|
$
|
1,716
|
$
|
1,594
|
$
|
2,585
|
||||||||
Production taxes
|
$
|
241
|
$
|
305
|
$
|
258
|
$
|
467
|
||||||||
DD&A
|
$
|
2,176
|
$
|
2,055
|
$
|
2,874
|
$
|
3,187
|
||||||||
General and administrative
|
$
|
1,824
|
$
|
1,221
|
$
|
1,479
|
$
|
1,390
|
||||||||
Mineral holding costs
|
$
|
365
|
$
|
252
|
$
|
295
|
$
|
166
|
||||||||
Water treatment plant
|
$
|
470
|
$
|
455
|
$
|
458
|
$
|
475
|
||||||||
Income (loss)
|
$
|
(23,669
|
)
|
$
|
(6,280
|
)
|
$
|
(23,703
|
)
|
$
|
(2,334
|
)
|
Three Months Ended
|
||||||||||||
September 30,
|
Increase
|
|||||||||||
2015
|
2014
|
(Decrease)
|
||||||||||
Production volumes
|
||||||||||||
Oil (Bbls)
|
56,084
|
98,274
|
(42,190
|
)
|
||||||||
Natural gas (Mcf)
|
107,952
|
197,217
|
(89,265
|
)
|
||||||||
Natural gas liquids (Bbls)
|
6,597
|
11,341
|
(4,744
|
)
|
||||||||
Equivalent (BOE)
|
80,673
|
142,484
|
(61,811
|
)
|
||||||||
Avg. Daily Equivalent (BOE/d)
|
877
|
1,549
|
(672
|
)
|
||||||||
Average sales prices
|
||||||||||||
Oil (per Bbl)
|
$
|
40.26
|
$
|
88.35
|
$
|
(48.09
|
)
|
|||||
Natural gas (per Mcf)
|
2.60
|
4.41
|
(1.81
|
)
|
||||||||
Natural gas liquids (per Bbl)
|
12.58
|
33.15
|
(20.57
|
)
|
||||||||
Equivalent (BOE)
|
32.50
|
69.68
|
(37.18
|
)
|
||||||||
Operating revenues (in thousands)
|
||||||||||||
Oil
|
$
|
2,258
|
$
|
8,682
|
$
|
(6,424
|
)
|
|||||
Natural gas
|
281
|
870
|
(589
|
)
|
||||||||
Natural gas liquids
|
83
|
376
|
(293
|
)
|
||||||||
Total operating revenue
|
2,622
|
9,928
|
(7,306
|
)
|
||||||||
Oil and gas production expense
|
(1,324
|
)
|
(2,238
|
)
|
914
|
|||||||
Production taxes
|
(241
|
)
|
(790
|
)
|
549
|
|||||||
Impairment
|
(21,446
|
)
|
--
|
(21,446
|
)
|
|||||||
Income before depreciation, depletion and amortization
|
(20,389
|
)
|
6,900
|
(27,289
|
)
|
|||||||
Depreciation, depletion and amortization
|
(2,176
|
)
|
(4,621
|
)
|
2,445
|
|||||||
Income
|
$
|
(22,565
|
)
|
$
|
2,279
|
$
|
(24,844
|
)
|
·
|
$874,000 reduction in executive retirement expense. The reduction during the three months ended September 30, 2015 was due in part to the extinguishment of accrued retirement liability of $344,000 upon the resignation of Chief Executive Officer, Keith Larsen. This reduction compares to an increase of $530,000 during the three months ended September 30, 2014 due the acceleration of executive retirement expense related to the retirement of former President, Mark Larsen;
|
·
|
$106,000 reduction in compensation expenses;
|
·
|
$68,000 reduction in professional services;
|
·
|
$68,000 reduction in contract services; and
|
·
|
$18,000 reduction in other general and administrative costs.
|
Nine Months Ended
|
||||||||||||
September 30,
|
Increase
|
|||||||||||
2015
|
2014
|
(Decrease)
|
||||||||||
Production volumes
|
||||||||||||
Oil (Bbls)
|
173,312
|
265,051
|
(91,739
|
)
|
||||||||
Natural gas (Mcf)
|
320,493
|
452,559
|
(132,066
|
)
|
||||||||
Natural gas liquids (Bbls)
|
21,790
|
23,599
|
(1,809
|
)
|
||||||||
Equivalent (BOE)
|
248,518
|
364,076
|
(115,559
|
)
|
||||||||
Avg. Daily Equivalent (BOE/d)
|
910
|
1,334
|
(424
|
)
|
||||||||
Average sales prices
|
||||||||||||
Oil (per Bbl)
|
$
|
43.21
|
$
|
91.32
|
$
|
(48.11
|
)
|
|||||
Natural gas (per Mcf)
|
2.75
|
4.91
|
(2.16
|
)
|
||||||||
Natural gas liquids (per Bbl)
|
9.91
|
37.46
|
(27.55
|
)
|
||||||||
Equivalent (BOE)
|
34.55
|
75.02
|
(40.47
|
)
|
||||||||
Operating revenues (in thousands)
|
||||||||||||
Oil
|
$
|
7,489
|
$
|
24,205
|
$
|
(16,716
|
)
|
|||||
Natural gas
|
881
|
2,223
|
(1,342
|
)
|
||||||||
Natural gas liquids
|
216
|
884
|
(668
|
)
|
||||||||
Total operating revenue
|
8,586
|
27,312
|
(18,726
|
)
|
||||||||
Oil and gas production expense
|
(4,634
|
)
|
(5,295
|
)
|
661
|
|||||||
Production taxes
|
(804
|
)
|
(2,291
|
)
|
1,487
|
|||||||
Impairment
|
(43,894
|
)
|
--
|
(43,894
|
)
|
|||||||
Income before depreciation, depletion and amortization
|
(40,746
|
)
|
19,726
|
(60,472
|
)
|
|||||||
Depreciation, depletion and amortization
|
(7,105
|
)
|
(11,498
|
)
|
4,393
|
|||||||
Income
|
$
|
(47,851
|
)
|
$
|
8,228
|
$
|
(56,079
|
)
|
·
|
$890,000 reduction in executive retirement expense. The reduction during the nine months ended September 30, 2015 was due to the extinguishment of accrued retirement liability of $344,000 upon the resignation of Chief Executive Officer, Keith Larsen. This reduction compares to an increase of $530,000 during the nine months ended September 30, 2014 due the acceleration of executive retirement expense related to the retirement of former President, Mark Larsen;
|
·
|
$379,000 reduction in professional services;
|
·
|
$134,000 reduction in compensation expenses;
|
·
|
$107,000 reduction in contract services; and
|
·
|
$63,000 reduction in other general and administrative costs and director's fees.
|
(In thousands)
|
||||||||||||
For the nine months ended September 30,
|
||||||||||||
2015
|
2014
|
Change
|
||||||||||
Net cash provided by operating activities
|
$
|
1,246
|
$
|
14,130
|
$
|
(12,884
|
)
|
|||||
Net cash (used in) investing activities
|
(1,359
|
)
|
(14,567
|
)
|
13,208
|
|||||||
Net cash (used in) financing activities
|
(20
|
)
|
(1,055
|
)
|
1,035
|
Quantity
|
|||||||||||||
Settlement Period
|
Counterparty
|
Basis
|
(Bbls/day)
|
Strike Price
|
|||||||||
Crude Oil Costless Collar
|
|||||||||||||
05/01/15 - 12/31/15
|
Wells Fargo
|
WTI
|
500
|
Put:
|
$
|
45.00
|
|||||||
Call:
|
$
|
58.79
|
|||||||||||
Crude Oil Costless Collar
|
|||||||||||||
01/01/16 - 06/30/16
|
Wells Fargo
|
WTI
|
350
|
Put:
|
$
|
57.50
|
|||||||
Call:
|
$
|
66.80
|
|||||||||||
Crude Oil Costless Collar
|
|||||||||||||
07/01/16 - 12/31/16
|
Wells Fargo
|
WTI
|
300
|
Put:
|
$
|
50.00
|
|||||||
Call:
|
$
|
65.25
|
i.
|
That the Company's disclosure controls and procedures are designed to ensure (a) that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms, and (b) that such information is accumulated and communicated to the Company's management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure; and
|
ii.
|
That the Company's disclosure controls and procedures are effective.
|
31.1
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
31.2
|
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
32.1
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002
|
|
32.2
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002
|
|
10.1 | Severance Agreement | |
101.INS
|
XBRL Instance Document
|
|
101.SCH
|
XBRL Schema Document
|
|
101.CAL
|
XBRL Calculation Linkbase Document
|
|
101.LAB
|
XBRL Label Linkbase Document
|
|
101.PRE
|
XBRL Presentation Linkbase Document
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
U.S. ENERGY CORP.
|
|||
(Registrant)
|
|||
Date: November 7, 2015
|
By:
|
/s/ David A. Veltri
|
|
DAVID A. VELTRI
|
|||
CEO, COO and President
|
|||
Date: November 7, 2015
|
By:
|
/s/ Steven D. Richmond
|
|
STEVEN D. RICHMOND
|
|||
Chief Financial Officer
|
|||
|
U.S. Energy Corp.
|
||
DATED:
|
October 8, 2015
|
By:
|
|
(Name)
|
|||
(Title)
|
DATED:
|
October 8, 2015
|
/s/ Keith G. Larsen | |
Keith G. Larsen
|
|||
(Name – Executive)
|
1. | I have reviewed this quarterly report on Form 10-Q of U.S. Energy Corp.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this transition report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation, and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ David Veltri
|
||
David Veltri
|
||
Chief Executive Officer
|
1. | I have reviewed this quarterly report on Form 10-Q of U.S. Energy Corp.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this transition report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation, and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Steven D. Richmond
|
||
Steven D. Richmond
|
||
Chief Financial Officer
|
/s/ David Veltri
|
||
David Veltri
|
||
Chief Executive Officer
|
||
November 7, 2015
|
/s/ David Veltri
|
||
David Veltri
|
||
Chief Executive Officer
|
||
November 7, 2015
|