U.S. Energy Corp. Announces Extension of $5.0 Million Share Repurchase Program and Separate Affiliate Share Repurchase

Rhea-AI Summary

U.S. Energy Corp. (NASDAQ: USEG) has announced the extension of its $5.0 million share repurchase program until June 30, 2026, with approximately $3.8 million remaining available for future repurchases. Since the program's initiation in April 2023, the company has repurchased 985,000 shares (2.8% of total shares) at an average price of $1.24 per share.

In a separate transaction, the company repurchased 635,400 common shares from Sage Road Capital affiliates at $2.47775 per share, using cash on hand. After this transaction, Sage Road Capital continues to own 6,304,037 company shares.

The company maintains flexibility to suspend or discontinue the program at any time, with repurchases conducted in accordance with Rule 10b-18 and other securities laws. CEO Ryan Smith emphasized that this program represents an attractive use of capital, supporting stock value and providing tax-efficient returns to shareholders.

Positive

• Extension of $5.0 million share repurchase program with $3.8 million still available
• Successfully repurchased 2.8% of outstanding shares at favorable average price of $1.24
• Additional repurchase of 635,400 shares from affiliates demonstrates confidence in share value
• Clean balance sheet and ample liquidity maintained while returning capital to shareholders

Negative

• Significant price differential between initial repurchase ($1.24) and affiliate repurchase ($2.47775) indicates price volatility
• Large portion of authorized repurchase amount ($3.8M of $5.0M) remains unused after nearly two years

Insights

Financial Analyst

U.S. Energy Corp.'s share repurchase program extension reveals a sophisticated capital allocation strategy with multiple layers of significance for investors. The program's execution to date has been particularly noteworthy, with the company having repurchased 985,000 shares at an average price of $1.24, representing a substantial 2.8% reduction in shares outstanding. This historical execution price, compared to current trading levels around $2.30, demonstrates management's astute timing in capital deployment.

The separate affiliate repurchase of 635,400 shares from Sage Road Capital at $2.47775 per share is equally significant. Despite this sale, Sage Road's continued holding of over 6.3 million shares suggests strong insider confidence in the company's long-term prospects. The transaction's pricing at the net offering price indicates a carefully structured deal that aligns with shareholder interests.

The remaining $3.8 million authorization through June 2026 provides substantial flexibility and firepower, representing approximately 4.8% of the current market capitalization. This extension, coupled with management's emphasis on maintaining a clean balance sheet while advancing their industrial gas project, suggests a well-balanced approach to capital allocation that prioritizes both growth initiatives and shareholder returns.

The program's structure under Rule 10b-18 compliance, with potential Rule 10b5-1 plan implementation, provides a systematic framework for execution while maintaining market stability. This methodical approach to capital return, combined with operational focus on free cash flow generation and carbon footprint reduction, positions U.S. Energy as an increasingly attractive small-cap energy investment opportunity.

HOUSTON, Jan. 29, 2025 (GLOBE NEWSWIRE) -- U.S. Energy Corp. (NASDAQ: USEG, “U.S. Energy” or the “Company”) today announced that its Board of Directors has authorized the extension of the previously announced share repurchase program under which the Company may purchase up to $5.0 million of its outstanding shares of common stock in the open market, in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The repurchase program was originally approved in April 2023 and extended in March 2024, and was to expire on June 30, 2025. The expiration date has now been extended until June 30, 2026. A total of up to approximately $3.8 million remains available under the repurchase program for future repurchases.

The Company’s decision to repurchase its shares, as well as the timing of such repurchases, will depend on a variety of factors, including the ongoing assessment of the Company’s capital needs, the market price of the Company’s common stock, general market conditions and other corporate considerations, as determined by management. The repurchase program may be suspended or discontinued at any time.

MANAGEMENT COMMENTARY

“U.S. Energy is committed to a focused and disciplined capital allocation strategy that emphasizes creating value in our shares by advancing our industrial gas project, maintaining a clean balance sheet, and ensuring ample liquidity," said Ryan Smith, U.S. Energy’s Chief Executive Officer, who continued, "The continuation of our share repurchase program reflects our belief that this represents a highly attractive use of capital. We expect this program to continue delivering multiple benefits to the Company and its stockholders, including supporting the market value of our common stock, providing a tax-efficient method of returning capital to shareholders, and driving accretion to key per-share metrics.”

REPURCHASE PROGRAM TO DATE

Since initiating the repurchase program in April 2023, we have repurchased 985,000 shares, representing 2.8% of our total shares outstanding, at an average price of $1.24 per share.

AFFILIATE SHARE REPURCHASE

Immediately following the closing of U.S. Energy’s recently completed underwritten offering, and separate from the ongoing repurchase program, discussed above, the Company repurchased from certain affiliates of Sage Road Capital, which is controlled by Joshua L. Batchelor, a member of the Board of Directors of the Company, an aggregate of 635,400 common shares at a price per share equal to $2.47775, the net price per share received by U.S. Energy as part of the recently completed underwritten offering, with cash on hand. Affiliates of Sage Road Capital own shares across multiple managed funds, and as of January 29, 2025, continue to own 6,304,037 Company shares.

More information regarding the stock repurchase can be found in the Current Report on Form 8-K filed by the Company today with the Securities and Exchange Commission.

ABOUT U.S. ENERGY CORP.

We are a growth company focused on consolidating high-quality assets in the United States with the potential to optimize production and generate free cash flow through low-risk development while maintaining an attractive shareholder returns program. We are committed to being a leader in reducing our carbon footprint in the areas in which we operate. More information about U.S. Energy Corp. can be found at www.usnrg.com.

ACCOMPANYING FINANCIAL DISCLOSURES

Under the stock repurchase program, shares may be repurchased from time to time in the open market or through negotiated transactions at prevailing market rates, or by other means in accordance with federal securities laws. Repurchases will be made at management’s discretion at prices management considers to be attractive and in the best interests of both the Company and its stockholders, subject to the availability of shares, general market conditions, the trading price of the common stock, alternative uses for capital, and the Company’s financial performance. Open market purchases are expected to be conducted in accordance with the limitations set forth in Rule 10b-18 of the Securities Exchange Act of 1934 (the “Exchange Act”) and other applicable laws and regulations. Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws.

The repurchase program may be suspended, terminated or modified at any time for any reason, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate. These factors may also affect the timing and amount of share repurchases. The repurchase program does not obligate the Company to purchase any particular number of shares. There is no guarantee as to the exact number or value of shares that will be repurchased by the Company, if any.

All shares purchased by the Company under the stock repurchase program will be retired and returned to treasury.

INVESTOR RELATIONS CONTACT

Mason McGuire
IR@usnrg.com
(303) 993-3200
www.usnrg.com

FORWARD-LOOKING STATEMENTS

Certain of the matters discussed in this communication which are not statements of historical fact constitute forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. 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: (1) risks associated with the stock buyback, including, but not limited to, the purchase price of shares acquired, the availability of funding for such buyback, the effect of such buyback on the Company’s cash on hand, and the effect of such buyback, if any, on the value of the Company’s securities; (2) the ability of the Company to grow and manage growth profitably and retain its key employees; (3) risks associated with the integration of recently acquired assets; (4) the Company’s ability to comply with the terms of its senior credit facilities; (5) the ability of the Company to retain and hire key personnel; (6) the business, economic and political conditions in the markets in which the Company operates; (7) the volatility of oil and natural gas prices; (8) the Company’s success in discovering, estimating, developing and replacing oil, natural gas and helium reserves; (9) risks of the Company’s operations not being profitable or generating sufficient cash flow to meet its obligations; (10) risks relating to the future price of oil, natural gas, NGLs and helium; (11) risks related to the status and availability of oil, natural gas and helium gathering, transportation, and storage facilities; (12) risks related to changes in the legal and regulatory environment governing the oil, gas and helium industry, and new or amended environmental legislation and regulatory initiatives; (13) risks relating to crude oil production quotas or other actions that might be imposed by the Organization of Petroleum Exporting Countries and other producing countries; (14) technological advancements; (15) changing economic, regulatory and political environments in the markets in which the Company operates; (16) general domestic and international economic, market and political conditions, including the military conflict between Russia and Ukraine and the global response to such conflict; (17) actions of competitors or regulators; (18) the potential disruption or interruption of the Company’s operations due to war, accidents, political events, severe weather, cyber threats, terrorist acts, or other natural or human causes beyond the Company’s control; (19) pandemics, governmental responses thereto, economic downturns and possible recessions caused thereby; (20) inflationary risks and recent changes in inflation and interest rates, and the risks of recessions and economic downturns caused thereby or by efforts to reduce inflation; (21) risks related to military conflicts in oil producing countries; (22) changes in economic conditions; limitations in the availability of, and costs of, supplies, materials, contractors and services that may delay the drilling or completion of wells or make such wells more expensive; (23) the amount and timing of future development costs; (24) the availability and demand for alternative energy sources; (25) regulatory changes, including those related to carbon dioxide and greenhouse gas emissions; (26) uncertainties inherent in estimating quantities of oil, natural gas and helium reserves and projecting future rates of production and timing of development activities; (27) risks relating to the lack of capital available on acceptable terms to finance the Company’s continued growth, potential future sales of debt or equity and dilution caused thereby; (28) the review and evaluation of potential strategic transactions and their impact on stockholder value and the process by which the Company engages in evaluation of strategic transactions; and (29) 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. 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, 2023 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, and future annual reports and quarterly reports. These reports and filings are available at www.sec.gov. Unknown or unpredictable factors also could have material adverse effects on the Company’s future results. 

FAQ

When does USEG's extended share repurchase program expire?

U.S. Energy Corp.'s share repurchase program has been extended until June 30, 2026.

How many shares has USEG repurchased since April 2023?

Since April 2023, USEG has repurchased 985,000 shares, representing 2.8% of total shares outstanding, at an average price of $1.24 per share.

How much remains available in USEG's share repurchase program?

Approximately $3.8 million remains available under the $5.0 million repurchase program for future repurchases.

What price did USEG pay for the Sage Road Capital affiliate shares?

USEG repurchased shares from Sage Road Capital affiliates at $2.47775 per share, equal to the net price received in the recent underwritten offering.

How many shares does Sage Road Capital still own in USEG after the repurchase?

After the repurchase, Sage Road Capital continues to own 6,304,037 shares of U.S. Energy Corp.