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

Rhea-AI Summary

U.S. Energy Corp. extends its share repurchase program, allowing the purchase of up to $5.0 million of its outstanding shares until June 30, 2025. Approximately $4.2 million remains available for future repurchases. The decision is based on various factors, including capital needs, stock price, and market conditions.

Insights

Financial Analyst

The extension of U.S. Energy Corp's share repurchase program signals a strong confidence from the management in the intrinsic value of the company's stock. By allocating up to $5.0 million for the repurchase of its shares, the company is indicating that it believes the shares are undervalued or that it is an opportune time to reduce the number of shares outstanding, potentially leading to an increase in earnings per share (EPS) and return on equity (ROE). Investors often view buybacks positively as they can indicate a bullish outlook by company leadership and a commitment to shareholder value.

However, the market's reaction to such news can vary. While a buyback may be seen as a positive sign, it also depends on the company's opportunity cost of capital. If the market perceives that the company could have invested that capital into high-return projects instead of repurchasing shares, the response might not be as favorable. Additionally, the repurchase program's impact on the stock price will largely depend on the market conditions and investor sentiment at the time of the buybacks.

Market Research Analyst

Share repurchase programs are often implemented by companies when they have excess cash and believe their stock is undervalued. U.S. Energy Corp's decision to extend its repurchase program can be interpreted as a strategic move to enhance shareholder value and manage the capital structure more efficiently. From a market perspective, this could be an indicator of a positive future outlook for the company, suggesting that management expects strong cash flows that would support both the repurchase program and ongoing operations.

Moreover, the repurchase program could potentially improve market perceptions of the company's financial health. By reducing the number of shares outstanding, the company may also be aiming to increase its stock price, making it more attractive to investors. However, the effectiveness of this strategy will depend on the execution of the repurchase program and the company's ability to maintain or improve its financial performance in the long term.

Legal Expert

U.S. Energy Corp's adherence to securities laws and regulations, particularly Rule 10b-18 of the Securities Exchange Act of 1934, is a critical component of their share repurchase program. This rule provides a safe harbor for companies, allowing them to repurchase their own stock in the market without being deemed to manipulate the market. Compliance with such regulations ensures that the repurchases are conducted in an orderly manner, minimizing potential market disruptions.

Investors should note that while the extension of the buyback program is a sign of management's confidence, the program may be suspended or discontinued at any time based on various corporate considerations. This flexibility allows the company to respond to changing market conditions or capital needs, but it also introduces a level of uncertainty for investors who may be looking for a more definitive commitment to repurchasing shares.

HOUSTON, March 21, 2024 (GLOBE NEWSWIRE) -- U.S. Energy Corp. (Nasdaq: USEG, “U.S. Energy” or the “Company”), a growth-focused energy company engaged in operating a portfolio of high-quality producing assets, 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. The repurchase program was originally approved in April 2023, and was to expire on June 30, 2024, which expiration date has now been extended until June 30, 2025. A total of up to approximately $4.2 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 has a focused and disciplined capital allocation strategy that prioritizes growing cash flow through accretive acquisitions, identifying organic growth initiatives, and returning cash to shareholders,” said Ryan Smith, U.S. Energy’s Chief Executive Officer. “The continuation of this program supports our belief that the repurchase of the Company’s shares represents a highly attractive use of our capital. We anticipate the continued repurchase program providing numerous benefits to the Company and its stockholders, including, among others, support in the market for the Company’s common stock, a more tax-efficient way of returning capital to shareholders compared to declaring cash dividends, and accretion to per share metrics.”

ABOUT U.S. ENERGY

We are a growth company focused on consolidating high-quality producing 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.

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, 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; the Company’s ability to comply with the terms of its senior credit facilities; the ability of the Company to retain and hire key personnel; the business, economic and political conditions in the markets in which the Company operates; the volatility of oil and natural gas prices; our success in discovering, estimating, developing and replacing oil and natural gas reserves; risks of our operations not being profitable or generating sufficient cash flow to meet our obligations; risks relating to the future price of oil, natural gas and NGLs; risks related to the status and availability of oil and natural gas gathering, transportation, and storage facilities; risks related to changes in the legal and regulatory environment governing the oil and gas industry, and new or amended environmental legislation and regulatory initiatives; 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; technological advancements; changing economic, regulatory and political environments in the markets in which the Company operates; general domestic and international economic, market and political conditions, including the military conflict between Russia and Ukraine and the global response to such conflict; actions of competitors or regulators; 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; pandemics, governmental responses thereto, economic downturns and possible recessions caused thereby; 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; risks related to military conflicts in oil producing countries; 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; the amount and timing of future development costs; the availability and demand for alternative energy sources; regulatory changes, including those related to carbon dioxide and greenhouse gas emissions; 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; dependence upon third-party vendors; 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. 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, 2022 and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. These reports and filings are available at www.sec.gov.

The Company cautions that the foregoing list of important factors is not complete. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on behalf of the Company 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 press release 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.

Investor Relations Contact

Mason McGuire
U.S. Energy Corp.
IR@usnrg.com
(303) 993-3200
www.usnrg.com

FAQ

What is the ticker symbol for U.S. Energy Corp.?

The ticker symbol for U.S. Energy Corp. is USEG.

What is the total amount authorized for share repurchase by U.S. Energy Corp.?

U.S. Energy Corp. has authorized the purchase of up to $5.0 million of its outstanding shares.

When does the share repurchase program of U.S. Energy Corp. expire?

The share repurchase program of U.S. Energy Corp. was originally set to expire on June 30, 2024, but has now been extended until June 30, 2025.

How much remains available for future repurchases under U.S. Energy Corp.'s share repurchase program?

Approximately $4.2 million remains available for future repurchases under U.S. Energy Corp.'s share repurchase program.

What factors will determine U.S. Energy Corp.'s decision to repurchase its shares?

U.S. Energy Corp.'s decision to repurchase its shares will depend on factors such as capital needs, stock price, market conditions, and other corporate considerations.