Welcome to the U.S. Energy Corporation Investor Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Mason McGuire, Director of Corporate Development. Thank you. You may begin. Thank you, operator, and good morning, everyone. Welcome to U.S. Energy Corp's conference call to discuss the company's recent transactions. Ryan Smith, our Chief Executive Officer, will provide an overview and discuss the company's strategic outlook. Today's discussion may contain forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to update our forward-looking statements. With that, I'd like to now turn the call over to Ryan Smith. Thank you, Mason, and good morning, everyone, and thank you for joining us today. I'm pleased to be with you this morning to discuss the company's recent transaction announcements, specifically those targeting helium production and other industrial gases in Montana, and share with you a view on our strategic outlook going forward. During this morning's discussions, I plan to highlight the relevancy of three key items related to this transaction. Number one, what is the asset and the background behind it? Number two, what is U.S. Energy going to do with it? And number three, what does U.S. Energy look like going forward, and how are we differentiated from the existing market? First, what is the Kevin Dome structure in Montana? From a composition standpoint, the dome is a greater than 100 sq mi anticlinal structure, meaning that it rises in the center and dips towards the edges. The formations that make up the dome are highly porous and permeable, making them ideal reservoirs for natural resources, both hydrocarbon and non-hydrocarbon. The formations also provide excellent storage capacity, which we believe makes it an ideal candidate for carbon sequestration. The major standout feature of the Kevin Dome is its long, proven role as a significant domestic source of CO2 and other industrial gases. Over the years, extensive geological surveys and research have confirmed the presence of vast CO2 reserves within the dome's rock formations. These formations, due to their high porosity and permeability, serve as excellent reservoirs, allowing for the accumulation of multiple industrial gases, including the CO2 and nitrogen-dominated formations bearing helium. Stepping back briefly, I'd like to touch on the historical timeline of development and ownership of these assets. As most on this call know, U.S. Energy owns and operates a large oil field in Montana. That field was originally developed by Unocal, who is now Chevron, who held ownership for many, many years. The Kevin Dome is approximately 30 miles in distance from the oil field, and as it became understood that the dome held vast CO2 deposits, the owner gained control of both assets with the ultimate intent to eventually initiate a large-scale CO2-enhanced recovery of the oil field. Eventually, the assets were sold to a fairly large public company called Quicksilver Resources, who subsequently sold the assets to a Blackstone backed private company called Synergy, which ultimately was bought out by its management and contains two members who sit on the current U.S. Energy board of directors. In 2022, U.S. Energy acquired the oil field, splitting the Kevin Dome and the oil assets up, and the Kevin Dome assets under LOI right now with Synergy represent that tail of assets. When the existing wells on the Kevin Dome were first tested for helium concentrations in 2023, the results were highly encouraging. After watching the evolution of the helium and CO2 markets over the last several years, already having significant operations on the ground in what can be a fairly remote area, and after multiple months of as thorough of a diligence process as I've been a part of, U.S. Energy decided to move forward and pursue the opportunity. In doing so, we also began to target surrounding areas that we believe further expanded the resource opportunity, and that resulted in both transactions that were released the other day and the subsequent dominant land position across the dome. To end the first point, and a very critical aspect on the background summary of the Kevin Dome, and I'll come back to this in a few minutes, but the vast majority of helium production in the United States is hydrocarbon-based, being driven by byproducts of natural gas production. The helium sources across the dome are non-hydrocarbon based, and they are part of other industrial gas streams, making this project as low of an environmental footprint as any of its type in the United States. Now, on to the second point: What is U.S. Energy going to do with the asset? The first thing we must now realize is that U.S. Energy controls a vast land position and resource across the dome. Thankfully, we have long-standing operations and staff in the area, giving us existing boots on the ground and a high degree of familiarity with the necessary materials and services to operate a development program in this part of the country. Initially, and I'll define initially as the next 12 months or so, we're currently in the various stages of planning everything from the drilling of multiple wells over the summer and fall, to designing the necessary infrastructure and processing capabilities, to securing long-term offtake agreements that have highly supportive economics of all development, and then ultimately realizing meaningful helium sales at the end of that initial period, which we expect to be in the summer of 2025. As we think about the near-term drilling activity, of which we have two initial wells planned to drill in August and September, with likely two more later in the fall. We have many data points on productive zones from shallow conventional oil and gas wells drilled many years ago. That being said, we believe the helium dominant pay zones have largely virgin reservoir pressure, resulting in what we expect to be highly productive wells with minimal declines at modest capital costs of $1.2 million-$1.4 million each, primarily driven by their relatively shallow and conventional nature. The expected size and minimal decline rates of the newly drilled wells are expected to support highly economic development of the asset base, both at the field and associated infrastructure levels, without the need to drill hundreds or even several dozens of producing wells. This is advantageous for numerous reasons, and the effects will ultimately show up in our realized economics. Additionally, our wells in the initial period will target our areas of high confidence while also bringing additional clarity to the productive parameters of the dome. It's very important to note that while we are focusing operations on the highest return on our near-term helium operations, we believe that there are other equally, if not more so, revenue streams associated with the project. While nitrogen as an inert gas can be flared, I think everybody's aware that CO2 can't be, but the market for sequestering and ultimately monetizing certain types of CO2 sources through various methods has exploded over the last several years and been supported by highly bipartisan legislation. Additionally, whether it be the food and beverage market or high-growth tech and automotive processes, the commercialization of reliable, domestic and non-hydrocarbon-based CO2 sources has grown tremendously, and we plan on pursuing all monetization avenues. Finally, to my third and final point, why U.S. Energy and what does the company look like from here going forward? U.S. Energy has always targeted being a growth platform that aggregated oil and gas assets. While oil prices have been more supportive over the last couple of years than they were previously experienced, the challenges facing public small and mid-cap E&Ps are real, specifically when managing current costs of capital and executing on meaningful transactions that truly make sense to existing shareholders. We've grown the platform here at the company when applicable, and we've also targeted asset sales when we felt the market was tilted in the seller's favor, as shown by our last two announced deals. That's left us with an ideal balance sheet, extremely low levels of simple bank debt, and a very clean cap structure. I've said multiple times in the past, a big part of my job here at U.S. Energy is not to complain about small cap E&P valuations, but to formulate and execute ways that unlock the value of our balance sheet that I believe exists. I think you have seen modestly outsized value realized for our assets in the A&D market through our last two asset sales, which does include our recent announcement, and that has been significantly greater than our market cap value on a percentage of company production and reserves sold. While any development project will, of course, need some form of development capital, U.S. Energy sits in a highly enviable position relative to any perceived peer of having significant resources of internally generated, non-dilutive capital. Whether it's cash flow from existing operations or, more meaningfully, opportunistic asset sales, having that lever to pull for significant cash value is a huge advantage, particularly with a highly desirable and immediate use of proceeds. In conclusion, U.S. Energy sits at the beginning of what I believe is a true first-mover advantage in this space, which I define as a growth-focused, non-hydrocarbon, industrial gas-focused company in the United States. The existing micro-scale companies in this space are hindered by burdensome and convoluted equity structures, ugly balance sheets, and listed on exchanges that are avoided by most institutional investors. U.S. Energy faces none of these hurdles, and we believe further corporate opportunities will present themselves as this becomes more apparent in the marketplace. While successful catalysts and sustainable growth will always drive long-term equity valuations, simply put, U.S. Energy's focus is creating a domestically focused, non-hydrocarbon, industrial gas platform that achieves these goals. In our scalable Kevin Dome position, we believe that we control a resource that gives us the ability to be the leading small-cap, industrial gas-focused company with the cleanest environmental footprint in the United States. Looking ahead, we have an incredible opportunity to leverage this, to drive growth, enhance our platform, and create lasting value for all of our stakeholders. Thank you for your participation this morning. We're now ready to take any questions. Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions. Our first question has come from the line of John White with ROTH Capital Partners. Please proceed with your questions. Good morning, and thank you for that overview of the recent transactions. On your carbon sequestration plans and the CO2 at the dome, is some of the CO2 going to be transported to the oil field you mentioned and used in a tertiary recovery process? Hey, John. Good morning. Thanks for joining the call. So as I kind of hit on during the summary, the long time historical plan, many, many decades was to use the CO2 to flood the oil field. I think from a plausibility standpoint, like, U.S. Energy now controls these two assets, is it something that we're going to thoroughly evaluate and diligence and research, just like we would an internal project we were positive about? Absolutely, we're going to do those things. I think where the market is going right now, both I'll say just capital markets wise, which is ultimately what we follow as a public company, I think there's probably more valuable avenues to monetize that CO2 stream and kinda keep it on a, what I'll call a closed loop system, on the dome, instead of piping it to the oil field. That being said, I think further down the road, whether it's on the platform we're building out now or some type of other structure where the oil assets may leave the platform, but stay owned by the company, I think it's a huge upside opportunity down the road, past these initial phases. Okay. Thank you. And, what kind of reserve estimate for the helium on both acreage blocks do you have in place? Great question. I'm going to punt that, just because we have not signed definitive documents with one of the parties yet, and I don't wanna piecemeal those numbers because, it's much more simple putting them all out at one time. I will say in terms of, PSA signing with the other deal, just from a high level, there's no reason for me to change my opinion that we had in the earnings call, that we're expecting this deal to close, at the end of September. And it's a public deal, so you can kinda back into definitive doc date expectations then. And once we do that, we'll have, our reserve estimates, plus whatever third-party work, we've had, we've had done at that time. So probably sometime this month, early August. Okay, I can understand that. Thank you. And the first two drilling locations this summer are going to be on the Wavetech acreage, correct? Correct. And I- Sorry, go ahead. I have your map on your press release in front of me. Can you generally describe where those locations are? Yeah. No, for sure. I think, you know, and I'm glad you used generally, even though, you know, we do have permits, so these are known and out there. The first well we're drilling, again, we're drilling these back-to-back, so the first and the second aren't really that much of a difference. But the first well is... It's pretty close to the lease line of both the Wavetech and the Synergy acreage. If you look at it, you know, at that map, it's probably, you know, where the lower right part and the upper left of the Synergy acreage and the upper left part of the Wavetech acreage kind of meet, is where the first well is being drilled. So we're excited about, you know, not only the prospects of that, but the mutually beneficial nature of drilling a well and proving up acreage, that really just shows the benefit of these two positions being together. And the second well is further south than that, on the Wavetech acreage. You know, both for economic purposes and boundary testing, that second well is being drilled, and we're expecting both of those to kick off, late August. Okay. So both wells are generally southeast of the Synergy acreage? Correct. Okay. That was a good description. Thank you very much. I'll turn the call back to the operator. Thank you. Our next questions come from the line of Charles Meade with Johnson Rice. Please proceed with your questions. Good morning, Ryan. Hey, Charles. Good morning. Ryan, I wonder if you can share with us in whatever level of specificity you're comfortable, the price for helium, the per Mcf price you're using to, you know, to use in your evaluations and, you know, that have led you to the conclusion that this is the best opportunity to deploy your capital. Yeah, no, that's a great question, right? And that is-- It seems simple, but the way the helium markets work, it's not as simple as just what you see on your screen that day. So, again, Charles, I know you know most of this, but I'll just say it out loud, is that- Please. The vast majority, the vast majority of helium is sold on long-term offtake agreements. And, you know, the spot prices you see on the market aren't necessarily relevant to the economics companies are going to be receiving. And, the traditional way outside of the, you know, the Exxons and the Kinder Morgans of the world, to sell your product was to enter into offtake agreements with these, with these large buyers, and that's just kinda how it was. That's kinda still how it is, and, or at least a big part of it. And I think, you know, I'll say historically, these, these amounts have, I'll say, steadily increased over the last 7 years -10 years. years. I mean, there's been highs and lows, but it's kind of been a steady up and to the right, somewhat, chart. During the absolute peak of, I believe it was Russia, Ukraine, and other things driving that, you saw offtake agreements start going off in the $700-$800 an Mcf range. And, those have come down, but those are extremely, extremely frothy prices. What do we see now mostly? $450-$500, if I was putting a range on it. You know, you see some that are higher, you see some that are a little bit lower. So I think on the traditional—yeah, yeah, it's driven by quality. Applicable to U.S. Energy, I think that's kind of where we see that range. Conservatism- Got it. - could drive it lower, optimism could drive it higher. That's the first part. The second part is, I personally believe, and we've seen some smaller entities do it that don't have the proper platform to do it, almost going directly to new and unique buyers. Of course, you know, you have the SpaceX's and the Blue Origins of the world and these other very well-known companies. But as the CO2 usage expands, both just because of the industries and combined with, like, recent legislation, the avenues to sell, I'll just say, your helium... I'm sorry, I said CO2 earlier. Your helium directly to these groups and kinda take out some of the middleman on that pricing, I think is real, and I think it's something we're going to pursue. And then thirdly, like, where do we run our breakevens here? You know, this project is definitely a development project, so you almost find, you know, where your breakevens are going to be through your analysis. We're not ready to give that information out just yet, Charles. I will say that, you know, internal forecasts and all the work we've done, under, you know, any reasonable assumptions for infrastructure and wells and overhead, et cetera, is significantly lower than that range of prices that I just said for us. Got it. Got it. Got it. Right, that's all really helpful. I recognize it's early, but I just wanted to get, you know, since as you made the point well, it's not a liquid and transparent market. It's maybe one of the big but non-obvious questions. I have a second question, but this is really about more kind of a big picture market structure and where does USEG fit in. But I actually want to start it with picking up on a point you just made about how, you know, helium prices spiked to in that Russia-Ukraine war. I can't remember the exact details, but I remember there was some. I remember reading an article that when one of those big steel plants went down, for some reason, they were a huge global source of helium. Maybe it was, maybe it was from the, maybe it was from the coal or something like that. But, but at the time, there was a real scare that, that people were gonna be short helium. And, since you've come out with your announcement, as you can imagine, our, our friends at Google are, are tracking all my searches, and so I'm now getting pushed all these articles on, on helium discoveries, right? Right. And, you know, and I'm maybe the same thing is happening to you. I'm getting. But, you know, I see these articles about, oh, well, in Minnesota, you know, someone, someone's found, you know, about 13% helium, you know, discovery. And of course, you know, that, that's not gonna be as well described as Kevin Dome, which has all these oil and gas penetrations, right? So I'm not trying to say it's, it's the same thing or any way or anything, but I, but I want you to give us a sense of how much you've looked at kind of market structure- Yeah - for helium in the US. And you gave us some new disclosures on page seven, that, in your, in your Kiefer Farms one well, you have 0.6% helium. And, you know, I think that what I've been able to read, the, the kind of threshold for commercial helium recovery, at least in traditional, hydrocarbon-associated accumulations, is like 0.3%. And you say that the, the word choice you used was projected to be as much as 1.2% helium. So can you give a sense of how pleased or not pleased you are? I mean, I think you are pleased, but how you see this project coming in on the cost of supply curve for helium in the U.S., is I guess what it really boils down to. Oh, man, that was a big question. Okay, let's and I'll- It took a long time to ask it. I'm sure I'll miss a couple of spots, so just remind me at the end what I don't hit. So I think backing up from the project and where we look at it from, and of course, I'm gonna relate this to oil and gas because most of the companies you cover are oil and gas, and I'm assuming plenty of the people dialed into this call are familiar with oil and gas. And there's no doubt been other helium discoveries around the country, around North America. I think. And I, I'm not here to throw shade on any of those discoveries. I think the most important thing to look at, especially, you know, as a public company, looking through it from that lens, is just like an oil and gas play. Like, if you have a very small acreage position and one good well, I'm not sure, you know. That's very good news, I guess, but it doesn't fit into the profile of having a scalable and a development level project that's acceptable for the public markets. And, and of course, there's some much bigger projects in the United States, but those projects are run by companies with names like Exxon and names like Kinder Morgan. And, you know, those guys aren't the ones we're talking about here. So as that comment relates to the Kevin Dome project, what's the differentiating factor here? Undoubtedly, it's its size. And, it's not exactly like this, and I'm just giving my opinion, and it's related to my background, but it feels very like early stage Bakken to me. It's a vast, vast resource that has a vast, vast amount of well control around it, and very, very little capital and technology has been used in this space. Absolutely nothing has been applied to it with current capital markets and current market dynamics. That's kind of my, my high level, my high level comment on that. I would say that the second item is the expected just size of these wells, and I don't mean the capital expense side, because just quite frankly, that's very, very low. A $1.2 million -$1.4 million vertical well is in a very attractive price from where I sit. But the expected size of these wells, and I know I'm just saying words here, but when we have our reserve reports come out, et cetera, I think it, it'll reflect that. We're very excited about it. And the concentrations of helium in the one well that candidly was drilled 7 years ago, and it wasn't even tested for helium up until 6 months ago, and looking back, I'm sure the company that operated that well would do 100 things different, had extremely, extremely stellar results that would move the needle for this company tremendously. And, you know, the reserve experts, again, I'm talking up something that's going to come in the future, and our third-party engineering consultants, you know, believe that that's a very good baseline to use, for that entire area. What do I call that entire area? Kind of moving into the next thing on what I expect economics to be. You know, while these acreage positions are very close to each other, they are two dominant formations. And, you know, our geologists will get mad at me for simplifying it like that, but I think from a capital markets perspective, there's multiple zones that could have multiple things. But what I look at right here, right now is CO2 streams with highly economic helium cuts, and I can monetize those CO2 streams, whether it's through carbon sequestration, cooperating with legislation, all the way on the other end of the spectrum to selling CO2 to food and beverage or automotive companies. It makes your whole stream non-hydrocarbon and highly economic. On the Wavetech acreage, it's predominantly nitrogen-based. They're smaller, a little bit smaller wells, a little bit simpler and less capital-intensive development. But we believe, again, those helium contents are probably a little bit higher on some of that acreage targeting the nitrogen-based zones. That's not saying their project is more economic than the other project. It's just saying strictly on helium, which really we're underwriting everything on. That's kind of how I look about, you know, the development and the different economics per the acreage. I know that that's rambling, and if I didn't hit all your questions, I apologize. No, no, I think you did. I recognize that you're really not gonna be able to—you don't have all the numbers yet to put it down, but the sense you have is that not only are you gonna be low on the cost curve, but that the scale is a differentiator for you. And I think that's a great point. I hadn't kind of thought about that, but maybe it's just because I'm dense, but no, I got your point, and thank you for the elaboration, Ryan. Of course. Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from the line of John White with ROTH Capital Partners. Please proceed with your questions. Thanks for taking my follow-up. On your two acreage blocks, how many helium wells have established production on your acreage or offsetting your acreage? So it's a complicated question because the wells hadn't been tested for helium, just like the main well that was on the Synergy acreage wasn't tested for helium until late last year. So, I mean, the amount of, I'll call it vertical well control, that you could go in and retest these zones, there's dozens of wells proving the formations that we believe hold the helium content. So, again, those wells haven't been tested for helium because it's kind of smaller mom-and-pop type operators when helium wasn't on their radar. But in terms of well control, for proof of formation, I mean, several dozen. There's just a massive amount. Helium only, there's been some to the north. We control such a large position here. The one that has been drilled and tested for helium is, you know, soon to be ours in the middle of that blue block. So definitely an exploratory aspect to it. I mean, I'm not, I wouldn't sit here and say, all 164,000 net acres that we're going to control are, we expect them to all be highly economic. But yeah, that's the answer. Okay. And those dozens of wells, they have tested for natural gas or CO2 or both? The vast majority of them were natural gas. Okay, and they're classified as proved undeveloped right now? I mean, a lot of them would still be producing or they're just test wells, but yes. Okay, thanks a lot. Appreciate that detail. Yep. Thank you. We have reached the end of our question and answer session. With that, this does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.