U.S. Energy Corp. (Nasdaq: USEG) reported its 2013 oil and gas and Mount Emmons capital expenditure budgets and provided an operational update on its oil and gas initiatives.
In December 2012, the company's board of directors approved a $27.1 million oil and gas capital expenditure budget for 2013. The company has allocated an estimated $7.1 million to be spent in the Williston Basin of North Dakota under its three current drilling programs. This amount is subject to upward adjustment depending on the pace of development with operators other than Brigham and Zavanna. Additionally, the company has budgeted $20 million for the acquisition of producing properties with associated proven reserves in 2013 with a primary focus on the Williston Basin.
U.S. Energy recently completed to wells in the Williston Basin and have turned them over to production.
The Ash Federal 5300 11-18T well operated by Oasis was completed and turned over to production in early November. The well had an early 24-hour flow back rate of 2,905 barrels of oil equivalent per day which consisted of approximately 2,683 barrels of oil and 1,334 thousand cubic feet of natural gas. The company has an approximate 4.69% working interest and 3.52% net revenue interest in this well.
The Barker 24-13 #1H well was completed mid-December and had an early 24-hour flow back rate of 1,856 barrels of oil equivalent per day on a restricted choke during drillout of the plugs, which consisted of approximately 1,769 barrels of oil and 524 thousand cubic feet of natural gas. The company has an approximate 4.74% working interest and 3.65% net revenue interest in this well.
At this time, the company has not budgeted any capital for its South Texas programs pending further analysis of nearby operators' drilling results in the Eagleford, Buda and Pearsall formations. Several operators are drilling in close proximity to our Leona River and Booth-Tortuga prospects, which are operated by Crimson Exploration. Crimson has notified the company that it wishes to continue monitoring results of the various formations before re-initiating operations in the prospects.
The company has approved a budget of $5.4 million for the advancement of the Mount Emmons molybdenum project. This includes operation of the water treatment plant, plant upgrades, continued permitting, the acquisition of Thompson Creek's interest in the Highlands Ranch property, legal, and lobbying expenses.
As announced in November, the company filed a mine plan of operations with the US Forest Service on Oct. 10, 2012, in Delta, Colo. The plan is currently under review.
U.S. Energy plans to fund its budget from cash on hand, cash flow from operations, borrowings under its secured revolving credit facility, the potential sale of its apartment complex in Gillette, Wyo., and the potential sale of the company's corporate aircraft and related facilities.
U.S. Energy Corp. is a natural resource exploration and development company headquartered in Riverton, Wyo., with a primary focus on the exploration and development of oil and natural gas.
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