U.S. Energy Corp. (NasdaqCM:USEG) entered into a Purchase and Sale Agreement to acquire Assets of Etxenergy, LLC for $11.8 million on June 29, 2022. The assets include all of the Seller's rights to, and interest in, certain operated producing properties totaling approximately 16,600 net acres, located in Henderson and Anderson Counties, Texas, adjacent to the Company's existing assets in the area.

The acquisition will also include certain wells, pipelines, contracts, technical data, records, personal property and hydrocarbons associated with the Properties, including two pipeline gathering systems and related infrastructure and certain operated oil and gas producing properties. The consideration payable for the assets is $11.8 million, which is expected to be funded with cash on hand and borrowings under its existing credit facility with Firstbank Southwest as administrative agent for one or more lenders. On July 26, 2022, in anticipation of the closing of the PSA, U.S. Energy entered into a letter agreement with Firstbank whereby it increased borrowing base under the Credit Agreement from $15 million to $20 million, and paid the administrative agent an upfront fee of $32,500 in connection with such increase.

The transaction is subject to certain customary termination rights by either party thereto (including in the event the closing has not occurred by July 29, 2022) and satisfaction of customary closing conditions, including the accuracy of the representations and warranties of the parties at Closing, subject, in certain instances, to certain materiality and other thresholds, the performance by the parties of their obligations and covenants under the PSA, the delivery of certain documentation by the parties, the absence of any injunction or other legal prohibitions preventing consummation of the acquisition, and that any title defects, remediation amounts and casualty losses not exceed 15% of the aggregate purchase price. The Transaction is expected to close in July 2022. Andrew Clinton of R. Reese & Associates, PLLC acted as legal advisor to U.S. Energy Corp.