U.S. Energy Corp. and Crested Corp.'s Rocky Mountain Gas, Inc. Subsidiary Signs Option Agreement on Producing Coalbed Methane Property in the Powder River Basin 184 Producing Wells Included

U. S. Energy,a Coal Bed Methane (CBM) Producer based in Wyoming, signs an option agreement to purchase 184 CBM producing wells, representing a 600% increase in the company's producing well count.

RIVERTON, Wyo., Jan. 7 /PRNewswire-FirstCall/ -- U.S. Energy Corp. (Nasdaq: USEG) and Crested Corp. (OTC Bulletin Board: CBAG), d/b/a USECC, today announced that their Rocky Mountain Gas, Inc. ("RMG") subsidiary has signed an Option Agreement to acquire certain coalbed methane (CBM) properties and assets in the Powder River Basin near Gillette, Wyoming. The agreement, with an undisclosed party, covers more than 10,000 gross acres of producing, proven and undeveloped CBM prospects. Under the terms of the agreement, RMG has until April 1, 2003 to complete its due diligence, raise sufficient capital to exercise the option and enter into a definitive Agreement for Purchase and Sale of the subject assets.
The optioned properties are reported to be producing CBM from 184 wells completed in various coal seams ranging from 400 to 500 feet in depth. Management believes that several deeper coals are prospective for development and that operational and infrastructure improvements, as well as drilling additional wells, could enhance current production. Included with the properties are various gas gathering contracts, gas purchasing contracts and additional drilling permits. RMG will utilize the services of recently retained Ryder Scott Co. Petroleum Consultants for reservoir evaluations while in the due diligence phase of the Option Agreement.

Keith Larsen, President of U.S. Energy Corp. said, "If Rocky Mountain Gas is able to exercise its option on this producing property, it positions U.S. Energy Corp. (through 90% ownership in RMG) as a significant gas producer in the Powder River Basin. RMG and USE continue to seek additional opportunities to expand our production and land positions in the coal bed methane arena."

ABOUT U.S. ENERGY CORP. AND CRESTED CORP.

U.S. Energy and Crested Corp. are engaged in joint business operations as USECC, and through their subsidiary Rocky Mountain Gas, Inc., own working interests in over 280,000 gross acres prospective for coalbed methane in the Powder River Basin of Wyoming and Montana and acreage adjacent to the Greater Green River Basin in southwest Wyoming. All properties are subject to a definitive agreement with a division of Carrizo Oil & Gas, Inc. (Nasdaq:CRZO) of Houston TX to develop and expand RMG's CBM properties dated July 10, 2001. USECC owns control of Sutter Gold Mining Company, which owns gold properties in California. USECC also owns various interests in uranium properties in Wyoming and Utah.

This press release includes statements, which may constitute "forward-looking" statements, usually containing the words "believe," "estimate," "project," "expect," or similar expressions. These statements are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, future trends in natural gas and mineral prices, the availability of capital for development of mineral projects and other projects, acceptance of the Companies' products and services in the marketplace, competitive factors, dependence upon third-party vendors, and other risks detailed in the Companies' periodic report filings with the "Securities and Exchange Commission." By making these forward-looking statements, the Companies undertake no obligation to update these statements for revision or changes after the date of this release.

                 For Further information, please contact:
        Keith G. Larsen, President U.S. Energy Corp. at (307) 856-9271
            Rob Kindle, Corporate Communications at (307) 856-9271