Item 1.01. Entry into a Material Definitive Agreement.

First Amendments to Purchase and Sale Agreements

On October 6, 2021, U.S. Energy Corp. ("we", "us", "U.S. Energy" or the "Company") filed a Current Report on Form 8-K with the Securities and Exchange Commission (the "SEC") that disclosed, among other things, that on October 4, 2021, the Company entered into three separate Purchase and Sale Agreements (the "Purchase Agreements"), with each of (a) Lubbock Energy Partners LLC ("Lubbock"); (b) Banner Oil & Gas, LLC, Woodford Petroleum, LLC and Llano Energy LLC (collectively, "Banner"), and (c) Synergy Offshore LLC ("Synergy", and collectively with Lubbock and Banner, the "Sellers").

On October 25, 2021 each of the Sellers and the Company entered into a First Amendment to Purchase and Sale Agreements (the "First Amendment"), which amended each of the Purchase Agreements to update the terms of the exhibits thereto which set forth a form of Nominating and Voting Agreement (the "Voting Agreement") to be entered into at the closing of the transactions contemplated by the Purchase Agreements (the "Closing").

As originally contemplated, the Voting Agreement was to provide for all the Sellers to agree to appoint and nominate each of their designated director nominees to the Board of Directors of the Company, with each Seller having the right, for so long as they held at least 5% of the Company's outstanding common stock, to appoint two members to the Board of Directors of the Company.

The First Amendment modified the Voting Agreement to provide that each Seller has the right to appoint two members to the Board of Directors, as long such Seller holds 15% or more of the Company's common stock, and thereafter, such Seller has the right to appoint one member to the Board of Directors, as long as such Seller holds 5% or more of the Company's common stock, in order for such Voting Agreement to comply with Nasdaq rules and requirements.

The Voting Agreement is contemplated to be entered into at or around the Closing.

The foregoing description of the First Amendment and Voting Agreement is only a summary and is not complete, and is qualified in its entirety by reference to the First Amendment and form of Voting Agreement, copies of which are attached hereto as Exhibits 2.4 and 10.1, respectively, and are incorporated into this Item 1.01 by reference in their entirety.

Item 3.03. Material Modifications to Rights of Security Holders.

The information set forth in Item 1.01 above relating to the First Amendment and the Voting Agreement (including the copies thereof incorporated by reference into Item 1.01) is incorporated by reference into this Item 3.03.

Item 9.01 Financial Statements and Exhibits.





(d) Exhibits.



Exhibit No.   Description
   2.1*+        Purchase and Sale Agreement between among Lubbock Energy Partners,
              LLC, as seller, and U.S. Energy Corp., as purchaser, dated as of
              October 4, 2021 (Filed as Exhibit 2.1 to the Current Report on Form
              8-K filed by the Company with the Securities and Exchange Commission
              on October 6, 2021, and incorporated by reference herein)
   2.2*+        Purchase and Sale Agreement between among Banner Oil & Gas, LLC,
              Woodford Petroleum, LLC and Llano Energy LLC, as sellers, and U.S.
              Energy Corp., as purchaser, dated as of October 4, 2021 (Filed as
              Exhibit 2.2 to the Current Report on Form 8-K filed by the Company
              with the Securities and Exchange Commission on October 6, 2021, and
              incorporated by reference herein)
   2.3*+        Purchase and Sale Agreement between among Synergy Offshore, LLC,
              as seller, and U.S. Energy Corp., as purchaser, dated as of October
              4, 2021 (Filed as Exhibit 2.3 to the Current Report on Form 8-K
              filed by the Company with the Securities and Exchange Commission on
              October 6, 2021, and incorporated by reference herein)
   2.4*         First Amendment to Purchase and Sale Agreements between Lubbock
              Energy Partners, LLC; Banner Oil & Gas, LLC, Woodford Petroleum, LLC
              and Llano Energy LLC; Synergy Offshore, LLC, and U.S. Energy Corp.,
              dated as of October 25, 2021
   10.1         Form of Nominating and Voting Agreement (proposed to be entered
              into between Lubbock Energy Partners, LLC; Banner Oil & Gas, LLC,
              Woodford Petroleum, LLC and Llano Energy LLC; Synergy Offshore, LLC,
              and U.S. Energy Corp.), attached as Exhibit 1 to the First Amendment
              to Purchase and Sale Agreements attached as Exhibit 2.4
    104       Cover Page Interactive Data File (the cover page XBRL tags are
              embedded within the Inline XBRL document)




* Filed herewith.

+ Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished supplementally to the Securities and Exchange Commission upon request; provided, however that U.S. Energy Corp. may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedule or exhibit so furnished.





FORWARD-LOOKING STATEMENTS

Certain of the matters discussed in this communication which are not statements of historical fact constitute forward-looking statements that involve a number of risks and uncertainties and are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Words such as "strategy," "expects," "continues," "plans," "anticipates," "believes," "would," "will," "estimates," "intends," "projects," "goals," "targets" and other words of similar meaning are intended to identify forward-looking statements, but are not the exclusive means of identifying these statements.

Important factors that may cause actual results and outcomes to differ materially from those contained in such forward-looking statements include, without limitation, the ability of the parties to close the Purchase Agreements on the terms set forth in, and pursuant to the required timing set forth in, the Purchase Agreements, if at all; the occurrence of any event, change or other circumstances that could give rise to the right of one or all of Sellers or the Company (collectively, the "Sale Agreement Parties") to terminate the Purchase Agreements; the effect of such termination, including fees potentially payable in connection therewith; the outcome of any legal proceedings that may be instituted against Sale Agreement Parties or their respective directors or officers; the ability to obtain approvals and meet other closing conditions to the Purchase Agreements on a timely basis or at all, including the risk that approvals required for the Purchase Agreements are not obtained on a timely basis or at all, or are obtained subject to conditions that are not anticipated or the expected benefits of the transaction; the ability to obtain approval by the Company's shareholders on the expected schedule of the transactions contemplated by the Purchase Agreements; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the Purchase Agreements; the ability of the Company to retain and hire key personnel; the diversion of management's attention from ongoing business operations; uncertainty as to the long-term value of the common stock of the Company following the closing of the Purchase Agreements; the business, economic and political conditions in the markets in which Sale Agreement Parties operate; fluctuations in oil and natural gas prices, uncertainties inherent in estimating quantities of oil and natural gas reserves and projecting future rates of production and timing of development activities; competition; operating risks; acquisition risks; liquidity and capital requirements; the effects of governmental regulation; adverse changes in the market for the Company's oil and natural gas production; dependence upon third-party vendors; risks associated with COVID-19, the global efforts to stop the spread of COVID-19, potential downturns in the U.S. and global economies due to COVID-19 and the efforts to stop the spread of the virus, and COVID-19 in general; the lack of capital available on acceptable terms to finance the Company's continued growth; and other risk factors included from time to time in documents U.S. Energy files with the Securities and Exchange Commission, including, but not limited to, its Form 10-Ks, Form 10-Qs and Form 8-Ks. These reports are available at www.sec.gov. Other unknown or unpredictable factors also could have material adverse effects on U.S. Energy's future results.

Other important factors that may cause actual results and outcomes to differ materially from those contained in the forward-looking statements included in this communication are described in the Company's publicly filed reports, including, but not limited to, the Company's Annual Report on Form 10-K for the year ended December 31, 2020 and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2021. These reports are available at www.sec.gov.

The Company cautions that the foregoing list of important factors is not complete, and does not undertake to update any forward-looking statements except as required by applicable law. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on behalf of any Sale Agreement Parties are expressly qualified in their entirety by the cautionary statements referenced above. Other unknown or unpredictable factors also could have material adverse effects on U.S. Energy's future results. The forward-looking statements included in this communication are made only as of the date hereof. U.S. Energy cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, U.S. Energy undertakes no obligation to update these statements after the date of this release, except as required by law, and takes no obligation to update or correct information prepared by third parties that are not paid for by U.S. Energy. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

Additional Information and Where to Find It

In connection with the transactions contemplated by the Purchase Agreements (the "Transactions"), the Company plans to file with the SEC a proxy statement to seek shareholder approval for certain of the Transactions, which, when finalized, will be sent to the shareholders of the Company seeking their approval of the respective transaction-related proposals. This communication is not a substitute for any proxy statement or other document U.S. Energy may file with the Securities and Exchange Commission (SEC) in connection with the proposed Transactions. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE PURCHASE AGREEMENTS, WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY AND THE PURCHASE AND SALE AGREEMENTS AND THE PROPOSED TRANSACTIONS.

Investors and security holders may obtain copies of these documents free of charge through the website maintained by the SEC at www.sec.gov or from the Company at its website, https://usnrg.com. Documents filed with the SEC by the Company will be available free of charge on the "Investors," "SEC Filings" page of our website at https://usnrg.com or, alternatively, by directing a request by mail, email or telephone to U.S. Energy, Inc. at 675 Bering Dr., Suite 390, Houston, Texas; IR@usnrg.com; or (303) 993-3200, respectively.





No Offer Or Solicitation

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Participants in the Solicitation

The Company, the Sellers and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the respective shareholders of the Company in respect of the proposed Transactions under the rules of the SEC. Information about the Company's directors and executive officers and their ownership of the Company is available in the Company's Definitive Proxy Statement on Schedule 14A, as filed with the Securities and Exchange Commission on April 29, 2021. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement and other relevant materials to be filed with the SEC regarding the Purchase Agreements when they become available. Investors should read the proxy statement carefully when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from the Company using the sources indicated above.

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