U.S. ENERGY CORP. (NASDAQ:USEG) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement.

On May 2, 2017, the Amended and Restated Credit Agreement dated
July 30, 2010, as amended (the Credit Agreement) between U.S.
Energy Corp.s wholly-owned subsidiary, Energy One, LLC (Energy
One), and Wells Fargo Bank, N.A. (WFB), was sold, assigned and
transferred to APEG Energy II, L.P. (APEG). APEG purchased and
assumed all of WFBs rights and obligations as the lender to
Energy One in the Credit Agreement. Concurrently, U.S. Energy
Corp. (the Company), Energy One and APEG entered into the Limited
Forbearance Agreement dated May 2, 2017 (the Forbearance
Agreement). The Company believes that the Forbearance Agreement
will provide the parties sufficient time to work toward a
long-term solution that enables the Company to execute its
operational strategy and ensure value for existing shareholders.

The Credit Agreement requires the Companys compliance with
certain restricted financial covenants. The Company previously
violated the financial ratio covenants for the fiscal quarters
ended September 30, 2016 and December 31, 2016, which constituted
an event of default under the Credit Agreement, and the violation
of said covenants has continued in 2017. Subject to continued
performance and compliance by the Company and Energy One with the
terms and conditions of the Forbearance Agreement and Credit
Agreement, APEG has agreed not to exercise its rights and
remedies arising as a result of certain existing and prospective
events of default under the Credit Agreement until July30, 2017.
Commencing on May 2, 2017, interest shall accrue on the
outstanding principal balance of the loans under the Credit
Agreement at a rate of 8.75% per annum. Under the Forbearance
Agreement, APEG has certain consent rights regarding the
appointment of directors of the Company, as well as with respect
to the transfer of Company property and certain cash flow and
accounting controls. In the event of default under the
Forbearance Agreement, the forbearance period will terminate
immediately and, without further notice or opportunity to cure,
APEG will be entitled to exercise all of its rights and remedies
under the Credit Agreement and Forbearance Agreement, including
acceleration of the debt and foreclosure.

Item 5.02 Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.

Reference is made to Item 1.01 of this Current Report on Form
8-K, which is incorporated herein by reference.

In connection with the Forbearance Agreement, four of the
directors currently serving on the Companys Board of Directors
(the Board) have agreed to resign and be replaced by three
directors reasonably acceptable to APEG. On May 2, 2017, Thomas
R. Bandy, Jerry W. Danni, James B. Fraser, and Leo A. Heath each
notified the Company of his resignation from the Board. The
resignations of Messrs. Bandy, Danni, Fraser and Heath were not a
result of any disagreement with the Company regarding the
Companys operations, policies or practices. As a result of said
resignations, David Veltri is the sole remaining director of the
Company.

In accordance with the Companys bylaws and articles of
incorporation, and subject to the terms of the Forbearance
Agreement, on May8, 2017, Mr. Veltri, acting in his capacity as
the sole remaining director in office, appointed each of Javier
F. Pico, Weldon Chitwood, and John Hoffman as a director to serve
on the Board. Mr. Pico will serve until the 2017 annual meeting
of shareholders, and will be named in the Companys 2017 proxy
statement as a nominee for director, to serve a three-year term
ending in 2020. Mr. Hoffman will serve until the 2018 annual
meeting of shareholders, and Mr. Chitwood will serve, along with
Mr. Veltri, until the 2019 annual meeting of shareholders.
Messrs. Pico, Chitwood, and Hoffman are independent directors
under applicable NASDAQ and SEC rules.

Messrs. Pico, Chitwood, and Hoffman are expected to be appointed
as members of the Companys Audit Committee, Compensation
Committee, and Nominating Committee. Mr. Pico is expected to be
appointed Chairman of the Audit Committee, Mr. Chitwood is
expected to be appointed Chairman of the Compensation Committee
and Mr. Hoffman is expected to be appointed Chairman of the
Nominating Committee. Mr. Veltri is expected to be appointed as
Chairman of the Board.

About U.S. ENERGY CORP. (NASDAQ:USEG)

U.S. Energy Corp. (U.S. Energy) is an independent energy company focused on the acquisition and development of oil and gas producing properties in the continental United States. The Company’s business activities are focused on South Texas and the Williston Basin in North Dakota. The Company operates through Oil and Gas segment. The Company participates in oil and gas projects primarily as a non-operating working interest owner through exploration and development agreements with various oil and gas exploration and production companies. The Company is also pursuing acquisitions of exploration, development and production-stage oil and gas properties or companies. The Company holds a geographically and geologically diverse portfolio of oil-weighted prospects in varying-stages of exploration and development. The Company engages in the prospect stages either for its own account or with prospective partners to enlarge its oil and gas lease ownership base.

U.S. ENERGY CORP. (NASDAQ:USEG) Recent Trading Information

U.S. ENERGY CORP. (NASDAQ:USEG) closed its last trading session up +0.035 at 1.000 with 40,856 shares trading hands.