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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x
Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the quarter ended March 31, 2005 or
   
o
Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the transition period from ___________ to ____________

Commission file number 0-6814

U.S. ENERGY CORP.
(Exact Name of Company as Specified in its Charter)

Wyoming
  
83-0205516
(State or other jurisdiction of
  
(I.R.S. Employer
incorporation or organization)
  
Identification No.)
     
877 North 8th West, Riverton, WY
  
82501
(Address of principal executive offices)
  
(Zip Code)
     
Company's telephone number, including area code:
  
(307) 856-9271

Not Applicable
Former name, address and fiscal year, if changed since last report)

Indicate by check mark whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES x    NO o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    
YES o    NO x

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

YES o    NO o

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class
  
Outstanding Shares at May 13, 2005
Common stock, $.01 par value
  
16,373,630
 

 
 

U.S. ENERGY CORP. and SUBSIDIARIES

INDEX

   
Page No.
PART I.
FINANCIAL INFORMATION
  
     
ITEM 1.
Financial Statements.
  
     
 
Condensed Consolidated Balance Sheets March 31, 2005 and December 31, 2004 (unaudited)
3-4
     
 
Condensed Consolidated Statements of Operations for the Three months Ended March 31, 2005 and 2004 (unaudited)
5
     
 
Condensed Consolidated Statements of Cash Flows Three Months Ended March 31, 2005 and 2004 (unaudited)
6-8
     
 
Notes to Condensed Consolidated Financial Statements (unaudited)
9-15
     
Management’s Discussion and Analysis of Financial Condition and Results of Operations
16-24
     
Quantitative and Qualitative Disclosures about Market Risk
25-26
     
Controls and Procedures
26
     
PART II.
OTHER INFORMATION
  
     
Legal Proceedings
27-28
     
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
29
     
Defaults Upon Senior Securities
29
     
Submission of Matters to a Vote of Shareholders
29
     
Other Information
29
     
Exhibits and Reports on Form 8-K
29
     
 
30
     
 
Certifications
See Exhibits


 
-2-
 
Index

U.S. ENERGY CORP. AND SUBSIDIARIES
              
               
CONDENSED CONSOLIDATED BALANCE SHEETS
              
(UNAUDITED)
              
             
               
   

March 31, 

    
December 31,
  
     
2005
    
2004
 
               
CURRENT ASSETS:
              
Cash and cash equivalents
  
$
7,996,600
  
$
3,842,500
  
Accounts receivable
              
Trade, net of allowance of $111,300 
    
802,000
   
797,500
 
Affiliates 
    
13,300
   
13,500
 
Other 
    
--
   
52,700
 
Current portion of long-term notes receivable
    
35,500
   
49,500
 
Prepaid expenses
    
408,200
   
489,700
 
Inventories
    
176,300
   
176,100
 
Total current assets 
    
9,431,900
   
5,421,500
 
               
INVESTMENTS:
              
Non-affiliated company
    
957,700
   
957,700
 
Restricted investments
    
6,851,500
   
6,852,300
 
Total investments 
    
7,809,200
   
7,810,000
 
               
PROPERTIES AND EQUIPMENT:
    
22,519,800
   
22,088,600
 
Less accumulated depreciation,
              
depletion and amortization 
    
(8,674,500
)
  
(8,322,000
)
Net properties and equipment 
    
13,845,300
   
13,766,600
 
               
OTHER ASSETS:
              
Notes receivable trade
    
2,950,800
   
2,971,800
 
Deposits and other
    
1,019,400
   
733,800
 
Total other assets 
    
3,970,200
   
3,705,600
 
Total assets
  
$
35,056,600
  
$
30,703,700
  
               
 
 
 
The accompanying notes are an integral part of these statements.
-3-
 
Index


U.S. ENERGY CORP. AND SUBSIDIARIES
  
           
CONDENSED CONSOLIDATED BALANCE SHEETS
  
(UNAUDITED)
  
LIABILITIES AND SHAREHOLDERS' EQUITY
  
           
   
March 31,
  
December 31,
  
   
2005
  
2004
 
CURRENT LIABILITIES:
          
Accounts payable
  
$
1,382,000
  
$
1,751,300
  
Accrued compensation expense
    
168,900
   
181,700
 
Asset retirement obligation
    
192,700
   
192,700
 
Current portion of long-term debt
    
3,332,400
   
3,400,100
 
Escrow
    
500,000
   
--
 
Other current liabilities
    
829,400
   
532,200
 
Total current liabilities
    
6,405,400
   
6,058,000
 
               
LONG-TERM DEBT
   
6,748,300
   
3,780,600
 
               
ASSET RETIREMENT OBLIGATIONS
    
7,986,800
   
7,882,400
 
               
OTHER ACCRUED LIABILITIES
    
1,928,600
   
1,952,300
 
               
DEFERRED GAIN ON SALE OF ASSET
    
1,279,000
   
1,279,000
 
               
MINORITY INTERESTS
    
434,900
   
871,100
 
               
COMMITMENTS AND CONTINGENCIES
              
               
FORFEITABLE COMMON STOCK, $.01 par value
              
442,740 shares issued, forfeitable until earned
    
2,599,000
   
2,599,000
 
               
PREFERRED STOCK,
              
$.01 par value; 100,000 shares authorized
              
No shares issued or outstanding
    
--
   
--
 
               
SHAREHOLDERS' EQUITY:
              
Common stock, $.01 par value;
             
unlimited shares authorized; 15,936,113
              
And 15,231,237 shares issued net of
              
treasury stock, respectively
    
159,300
   
152,300
 
Additional paid-in capital
    
62,371,700
   
59,157,100
 
Accumulated deficit
    
(50,822,900
)
  
(49,321,700
)
Treasury stock at cost,