The following is a summary of the U.S. Energy Corp. (USEG) Q2 2024 Earnings Call Transcript:

Financial Performance:

• U.S. Energy reported Q2 2024 oil and gas sales of approximately $6 million, down from $8 million in the previous year, influenced by a 38% reduction in volumes but offset by a 22% increase in realized prices.

• The company achieved a net loss of $2 million, an improvement from the previous year's loss of $2.5 million.

• Adjusted EBITDA for Q2 2024 was $1.1 million, compared to $900,000 in the same period last year.

• Lease operating expense for the quarter was $3.1 million, equating to $27.69 per BOE, reflecting an 18% reduction in total lease operating expenses year-over-year.

• Cash and general administrative expenses were reduced by 43%, with $1.6 million reported for Q2 2024.

• Outstanding debt as of June 30, 2024, was $7 million with a subsequent paydown reducing debt to $2 million.

Business Progress:

• U.S. Energy closed an initial transaction targeting helium and other industrial gases, indicating a strategic pivot towards non-hydrocarbon industrial gas-focused operations, increasing environmental sustainability.

• The company plans to initiate drilling on two wells in September, with further development expected, and forecasts results by Q4 2024.

• Adjustments in operations due to severe weather included managing increased operating expenses and restoring production quickly, reflecting strong operational resilience and efficiency.

Opportunities:

• The strategic shift to helium and industrial gas non-hydrocarbon assets presents a high economic scalability and lower environmental impact, distinguishing U.S. Energy in the market.

• Asset sales strategy and optimized balance sheet provide financial flexibility and capacity for future expansions and operations.

• Continued robust share repurchase program underscores management's confidence in the company's valuation and provides an avenue for enhancing shareholder value.

Risks:

• Production and financial performance were negatively impacted by severe weather conditions, although restored quickly, this highlights geographical and environmental vulnerabilities.

• Market dynamics and cost of capital represent ongoing challenges for small to mid-cap E&Ps, necessitating prudent financial management and strategic asset optimization.

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