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Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

  
 

For the Quarterly Period Ended March 31, 2024

  

or

  

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

  
 

For the transition period from _____________ to _____________________

 

Commission File Number 000-06814

 

logolg.jpg

 

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

 

83-0205516

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

1616 S. Voss Road, Suite 725, Houston, Texas

 

77057

(Address of principal executive offices)

 

(Zip Code)

 

(346) 509-8734

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading symbol(s)

 

Name of each exchange on which registered

Common stock, par value $0.01

 

USEG

 

NASDAQ Stock Market LLC
(Nasdaq Capital Market)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☒

Smaller reporting company ☒

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

The registrant had 25,287,213 shares of its common stock, par value $0.01 per share, outstanding as of May 6, 2024.

 

 

 
Table of Contents

 

 

TABLE OF CONTENTS

 

   

Page

Cautionary Note About Forward-Looking Statements

3
     

Part I.

FINANCIAL INFORMATION

4
     

Item 1.

Financial Statements

4
 

Condensed Consolidated Balance Sheets (unaudited)

4
 

Condensed Consolidated Statements of Operations (unaudited)

5
 

Condensed Consolidated Statements of Changes in Shareholders’ Equity (unaudited)

6
 

Condensed Consolidated Statements of Cash Flows (unaudited)

7
 

Notes to Unaudited Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

22

Item 4.

Controls and Procedures

22
     

Part II.

OTHER INFORMATION

23
     

Item 1.

Legal Proceedings

23

Item 1A.

Risk Factors

23

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

24

Item 3.

Defaults Upon Senior Securities

25

Item 4.

Mine Safety Disclosures

25

Item 5.

Other Information

25

Item 6.

Exhibits

26
     

Signatures

27
 

 

2
Table of Contents

 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q (this “Report” or “Form 10-Q”), including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts are forward-looking statements.

 

Examples of forward-looking statements in this Report include:

 

 

●

planned capital expenditures for oil and natural gas exploration and environmental compliance;
 

●

potential drilling locations and available spacing units, and possible changes in spacing rules;
 

●

cash expected to be available for capital expenditures and to satisfy other obligations;
 

●

recovered volumes and values of oil and natural gas approximating third-party estimates;
 

●

anticipated changes in oil and natural gas production;
 

●

drilling and completion activities and opportunities;
 

●

timing of drilling additional wells and performing other exploration and development projects;
 

●

expected spacing and the number of wells to be drilled with our oil and natural gas industry partners;
 

●

when payout-based milestones or similar thresholds will be reached for the purposes of our agreements with our partners;
 

●

expected working and net revenue interests, and costs of wells, relating to the drilling programs with our partners;
 

●

actual decline rates for producing wells;
 

●

future cash flows, expenses and borrowings;
 

●

pursuit of potential acquisition opportunities;
 

●

economic downturns, wars and increased inflation and interest rates, and possible recessions caused thereby;
 

●

the effects of global pandemics on our operations, properties, the market for oil and gas, and the demand for oil and gas;
 

●

our expected financial position;
 

●

our expected future overhead reductions;
 

●

our ability to become an operator of oil and natural gas properties;
 

●

our ability to raise additional financing and acquire attractive oil and natural gas properties; and
 

●

other plans and objectives for future operations.

 

These forward-looking statements are identified by their use of terms and phrases such as “may,” “expect,” “estimate,” “project,” “plan,” “believe,” “intend,” “achievable,” “anticipate,” “will,” “continue,” “potential,” “should,” “could,” “up to,” and similar terms and phrases. Though we believe that the expectations reflected in these statements are reasonable, they involve certain assumptions, risks and uncertainties. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q, and in particular, under and incorporated by reference in, “Risk Factors”, below, the risks discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and those discussed in other documents we file with the Securities and Exchange Commission (the “SEC” or the “Commission”). Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

 

All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements above.

 

All forward-looking statements speak only at the date of the filing of this Report. We do not undertake any obligation to update or revise publicly any forward-looking statements except as required by law, including the securities laws of the United States and the rules and regulations of the SEC.

 

3
Table of Contents
 

 

Part I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

U.S. ENERGY CORP. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

 

 

  

March 31, 2024

  

December 31, 2023

 
         

ASSETS

        

Current assets:

        

Cash and equivalents

 $2,006  $3,351 

Oil and natural gas sales receivables

  2,088   2,336 

Marketable equity securities

  179   164 

Commodity derivative asset -current

  59   1,844 

Other current assets

  929   527 

Real estate assets held for sale, net of selling costs

  139   150 
         

Total current assets

  5,400   8,372 
         

Oil and natural gas properties under full cost method:

        

Unevaluated properties

  -   - 

Evaluated properties

  171,339   176,679 

Less accumulated depreciation, depletion and amortization

  (108,250)  (106,504)
         

Net oil and natural gas properties

  63,089   70,175 
         

Other Assets:

        

Property and equipment, net

  842   899 

Right-of-use asset

  653   693 

Other assets

  286   305 
         

Total assets

 $70,270  $80,444 
         

LIABILITIES AND SHAREHOLDERS’ EQUITY

        

Current liabilities:

        

Accounts payable and accrued liabilities

 $3,695  $4,064 

Accrued compensation and benefits

  404   702 

Revenue and royalties payable

  4,937   4,857 

Asset retirement obligations - current

  1,273   1,273 

Current lease obligation

  186   182 
         

Total current liabilities

  10,495   11,078 
         

Noncurrent liabilities:

        

Credit facility

  5,000   5,000 

Asset retirement obligations - noncurrent

  17,452   17,217 

Long-term lease obligation, net of current portion

  564   611 

Deferred tax liability

  16   16 
         

Total liabilities

  33,527   33,922 
         

Commitments and contingencies (Note 8)

          
         

Shareholders’ equity:

        

Common stock, $0.01 par value; 245,000,000 shares authorized; 25,343,013 and 25,333,870 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

  253   253 

Additional paid-in capital

  218,161   218,403 

Accumulated deficit

  (181,671)  (172,134)
         

Total shareholders’ equity

  36,743   46,522 
         

Total liabilities and shareholders’ equity

 $70,270  $80,444 

 

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

 

4
Table of Contents
 

 

U.S. ENERGY CORP. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE three months ended March 31, 2024 and 2023

(In thousands, except share and per share amounts)

 

   

Three Months Ended March 31,

  
   

2024

    

2023

  
                 

Revenue:

                

Oil

   $ 4,727     $ 7,095  

Natural gas and liquids

     664       1,177  

Total revenue

     5,391       8,272  
                 

Operating expenses:

                

Lease operating expenses

     3,186       4,409  

Gathering, transportation and treating

     64       114  

Production taxes

     343       520  

Depreciation, depletion, accretion and amortization

     2,195       2,417  

Impairment of oil and natural gas properties

     5,419       -  

General and administrative expenses

     2,206       2,772  

Total operating expenses

     13,413       10,232  
                 

Operating income (loss)

     (8,022 )     (1,960 )
                 

Other income (expense):

                

Commodity derivative gain (loss), net

     (1,381 )     919  

Interest (expense), net

     (120 )     (268 )

Other income (expense), net

     4       -  

Total other income (expense)

     (1,497 )     651  
                 

Net income (loss) before income taxes

   $ (9,519 )   $ (1,309 )

Income tax (expense) benefit

     (18 )     62  

Net income (loss)

   $ (9,537 )   $ (1,247 )
                 

Basic and diluted weighted average shares outstanding

     25,388,221       25,178,565  

Basic and diluted income (loss) per share

   $ (0.38 )   $ (0.05 )

 

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

 

5
Table of Contents
 

 

U.S. ENERGY CORP. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN SHAREHOLDERS’ EQUITY

FOR THE three months ended March 31, 2024 and 2023

(in thousands, except share amounts)

 

                   

Additional

                  
   

Common Stock

    

Paid-in

    

Accumulated

          
   

Shares

    

Amount

    

Capital

    

Deficit

    

Total

  
                                         

Balances, December 31, 2022

     25,023,812     $ 250     $ 216,690     $ (138,586 )   $ 78,354  

Stock-based compensation

     -       -       727       -       727  

Shares issued upon vesting of restricted stock awards

     273,000       3       (3 )     -       -  

Shares withheld to settle tax withholding obligations for restricted stock awards

     (62,140 )     (1 )     (149 )     -       (150 )

Cash dividends

     -       -       -       (596 )     (596 )

Net loss

     -       -       -       (1,247 )     (1,247 )

Balances, March 31, 2023

     25,234,672     $ 252     $ 217,265     $ (140,429 )   $ 77,088  
                                         

Balances, December 31, 2023

     25,333,870     $ 253     $ 218,403     $ (172,134 )   $ 46,522  

Stock-based compensation

     -       -       200       -       200  

Shares issued upon vesting of restricted stock awards

     426,104       4       (4 )     -       -  

Shares withheld to settle tax withholding obligations for restricted stock awards

     (98,761 )     (1 )     (104 )     -       (105 )

Share repurchases

     (318,200 )     (3 )     (334 )     -       (337 )

Net loss

     -       -       -       (9,537 )     (9,537 )

Balances, March 31, 2024

     25,343,013     $ 253     $ 218,161     $ (181,671 )   $ 36,743  

 

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

 

6
Table of Contents
 

 

U.S. ENERGY CORP. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE three months ended March 31, 2024 and 2023

(in thousands)

 

   

2024

    

2023

  
                 

Cash flows from operating activities:

                

Net income (loss)

   $ (9,537 )   $ (1,247 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

                

Depreciation, depletion, accretion, and amortization

     2,195       2,417  

Impairment of oil and natural gas properties

     5,419       -  

Deferred income taxes

     -       (62 )

Total commodity derivatives (gains) losses, net

     1,381       (919 )

Commodity derivative settlements received (paid)

     404       (406 )

(Gains) losses on marketable equity securities

     (15 )     -  

Impairment and loss on real estate held for sale

     11       -  

Amortization of debt issuance costs

     12       12  

Stock-based compensation

     200       727  

Right of use asset amortization

     40       55  

Changes in operating assets and liabilities:

     -       -  

Oil and natural gas sales receivable

     248       1,145  

Other assets

     (397 )     52  

Accounts payable and accrued liabilities

     (245 )     (794 )

Accrued compensation and benefits

     (298 )     (754 )

Revenue and royalties payable

     80       79  

Payments on operating lease liability

     (43 )     (58 )

Payments of asset retirement obligations

     (58 )     (11 )
                 

Net cash provided by (used in) operating activities

     (603 )     236  
                 

Cash flows from investing activities:

                

Oil and natural gas capital expenditures

     (144 )     (1,106 )

Property and equipment expenditures

     -       (261 )

Proceeds from sale of oil and natural gas properties, net

     (35 )     -  
                 

Net cash provided by (used in) investing activities

     (179 )     (1,367 )
                 

Cash flows from financing activities:

                

Payments on insurance premium finance note

     (62 )     (112 )

Shares withheld to settle tax withholding obligations for restricted stock awards

     (105 )     (151 )

Dividends paid

     -       (596 )

Repurchases of common stock

     (396 )     -  
                 

Net cash provided by (used in) financing activities

     (563 )     (859 )
                 

Net (decrease) increase in cash and equivalents

     (1,345 )     (1,990 )
                 

Cash and equivalents, beginning of period

     3,351       4,411  
                 

Cash and equivalents, end of period

   $ 2,006     $ 2,421  

 

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements. Please see Note-15- Supplemental Disclosures of Cash Flow Information.

 

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U.S. ENERGY CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

1. ORGANIZATION, OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

 

Organization and Operations

 

U.S. Energy Corp. (collectively with its wholly-owned subsidiaries, Energy One LLC (“Energy One”) and New Horizon Resources LLC (“New Horizon Resources”), referred to as the “Company” in these notes to unaudited Condensed Consolidated Financial Statements) is incorporated in the State of Delaware. The Company’s principal business activities are focused on the acquisition, exploration, and development of onshore oil and natural gas properties in the United States, which the Company considers a single operating segment. Our principal properties and operations are in the Rockies region (Montana, Wyoming and North Dakota), the Mid-Continent (Oklahoma, Kansas and North and East Texas) region, and the West Texas, South Texas, and Gulf Coast region.

 

Basis of Presentation

 

The accompanying unaudited Condensed Consolidated Financial Statements are presented in accordance with U.S. generally accepted accounting principles (“GAAP”) and have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, certain information and footnote disclosures required by GAAP for complete financial statements have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the Condensed Consolidated Financial Statements have been included.

 

For further information, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 26, 2024. Our financial condition as of March 31, 2024, and operating results for the three months ended March 31, 2024, are not necessarily indicative of the financial condition and results of operations that may be expected for any future interim period or for the year ending December 31, 2024.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the fair value of oil and gas properties acquired, oil and natural gas reserves that are used in the calculation of depreciation, depletion, amortization, and impairment of the carrying value of evaluated oil and natural gas properties; production and commodity price estimates used to record accrued oil and natural gas sales receivables; future prices of commodities used in the valuation of commodity derivative contracts; and the cost and timing of future asset retirement obligations. The Company evaluates its estimates on an on-going basis and bases its estimates on historical experience and on various other assumptions the Company believes to be reasonable. Due to inherent uncertainties, including the future prices of oil and natural gas, these estimates could change in the near term and such changes could be material.

 

Principles of Consolidation

 

The accompanying Condensed Consolidated Financial Statements have been prepared in conformity with GAAP and include the accounts of U.S. Energy Corp. and its wholly-owned subsidiaries Energy One and New Horizon Resources. U.S. Energy Corp. accounts for its share of oil and gas exploration and production activities, in which it has a direct working interest, by reporting its proportionate share of assets, liabilities, revenues, costs, and cash flows within the relevant lines on the balance sheets, statements of operations, and statements of cash flows. All inter-company balances and transactions have been eliminated in consolidation.

 

Reclassifications

 

Certain prior year amounts are reclassified to conform to the current year presentation.

 

Historically, the Company included gathering, transportation, and treating costs within lease operating expense on the Condensed Consolidated Statements of Operations. Effective July 1, 2023, the Company began classifying gathering, treating, and transportation costs in a separate line item, titled Gathering, transportation, and treating, on the Condensed Consolidated Statements of Operations and recast prior period results for this reclassification. This reclassification had no impact on the Company's net income, earnings per share, cash flows, or financial position. The Company revised historical periods to reflect this change in presentation.

 

The Company has historically included revenue and royalties payable within accounts payables and accrued liabilities on the Condensed Consolidated Balance Sheets. Effective December 31, 2023, the Company began classifying revenue and royalties payable as a separate line item on the Condensed Consolidated Balance Sheet.  The Condensed Consolidated Statements of Cash Flows has been updated to separate changes in operating assets and liabilities from revenue and royalties payable and accounts payable and accrued liabilities. This reclassification had no impact on the Company's net income (loss), income (loss) per share, cash flows, or financial position. The Company revised historical periods to reflect this change in presentation.

 
 

2. ACQUISITIONS AND DIVESTITURES

 

Divestitures

 

During the year ended December 31, 2023, the Company closed on a series of individual divestitures for a total of $7.0 million in net proceeds before transaction costs of $0.4 million.  The divestitures included the Company’s non-operated interests in 152 wells across North Dakota, New Mexico, and Texas, and overriding royalty interests in seven wells in Karnes County, Texas.  These divestitures did not have a significant impact to reserves volumes or the full cost pool depletion rate.  As such, the Company recorded the proceeds, net of transaction costs and purchase price adjustments, to the full cost pool, with no gain or loss recognized.  Relief of associated asset retirement obligations of $0.5 million were also recorded to the full cost pool.

 

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3. REVENUE RECOGNITION

 

The Company disaggregates revenues from its share of revenue from the sale of oil and natural gas and liquids by region. The Company’s revenues in the Rockies region, West Texas, South Texas, and Gulf Coast region, and Mid-Continent region for the three months ended March 31, 2024 and 2023, are presented in the following table:

 

  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Revenue:

        

Rockies

        

Oil

 $1,721  $2,338 

Natural gas and liquids

  41   88 

Total

 $1,762  $2,426 
         

West Texas, South Texas, and Gulf Coast

        

Oil

 $1,599  $2,955 

Natural gas and liquids

  46   209 

Total

 $1,645  $3,164 
         

Mid-Continent

        

Oil

 $1,407  $1,802 

Natural gas and liquids

  577   880 

Total

 $1,984  $2,682 
         

Combined Total

 $5,391  $8,272 

 

 

Significant concentrations of credit risk

 

The Company has exposure to credit risk in the event of non-payment of oil and natural gas receivables by purchasers of its operated oil and natural gas properties. The following table presents the purchasers that accounted for 10% or more of the Company’s total oil and natural gas revenue for at least one of the periods presented:

 

  

Three Months Ended

 
  

March 31,

 
  

2024

  

2023

 

Purchaser A

  28%  11%

Purchaser B

  23%  18%

Purchaser C

  11%  0%

Purchaser D

  0%  15%

Purchaser E

  0%  13%

 
 

4. LEASES

 

The Company’s operating lease right-of-use asset and lease liability are recognized at their discounted present value under the following captions in the Condensed Consolidated Balance Sheets on  March 31, 2024 and December 31, 2023:

 

  

March 31, 2024

  

December 31, 2023

 
  

(in thousands)

 

Right-of-use asset

 $653  $693 

Lease liability

        

Current lease obligation

 $186  $182 

Long-term lease obligation

  564   611 
  $750  $793 

 

The Company recognizes lease expense on a straight-line basis excluding short-term and variable lease payments, which are recognized as incurred. Short-term lease cost represents payments for oilfield equipment with original lease terms less than one year. Following are the amounts recognized as components of lease cost for the three months ended March 31, 2024 and 2023:

 

  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Operating lease cost

 $49  $65 

Short-term lease cost

  212   269 

Total lease costs

 $261  $334 

 

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The Company’s Houston office operating lease does not contain implicit interest rates that can be readily determined; therefore, the Company used the incremental borrowing rates in effect at the time the Company entered into the leases.

 

  

As of March 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Weighted average lease term (years)

  3.7   4.7 

Weighted average discount rate

  4.25%  4.25%

 

 

Maturity of operating lease liabilities with terms of one year or more as of March 31, 2024 are presented in the following table:

 

  

March 31, 2024

 
  

(in thousands)

 

2024

 $160 

2025

  218 

2026

  224 

2027

  210 

Total lease payments

 $812 

Less: imputed interest

  (62)

Total lease liability

 $750 

 
 

5. OIL AND NATURAL GAS PRODUCING ACTIVITIES

 

Full Cost Method Ceiling Test and Impairment

 

The reserves used in the ceiling test incorporate assumptions regarding pricing and discount rates over which management has no influence in the determination of present value. In the calculation of the ceiling test as of March 31, 2024, the Company used $77.48 per barrel for oil and $2.45 per one million British Thermal Units (MMbtu) for natural gas (as further adjusted for property, specific gravity, quality, local markets and distance from markets) to compute the future cash flows of the Company’s producing properties. The discount factor used was 10%.

 

The Company recorded a $5.4 million ceiling test write-down of its oil and gas properties during the three months ended March 31, 2024, due to a reduction in the value of proved oil and natural gas reserves primarily as a result of a decrease in crude oil and natural gas prices, as well as reserves revisions related to wells shut-in during the first quarter of 2024 and updates to the decline curves for certain wells.

 
 

6. DEBT

 

On January 5, 2022, the Company entered into a four-year credit agreement (“Credit Agreement”) with FirstBank Southwest (“FirstBank”) as administrative agent for one or more lenders (the “Lenders”), which provided for a revolving line of credit with an initial borrowing base of $15 million, and a maximum credit amount of $100 million. Borrowings under the Credit Agreement are collateralized by a first priority, perfected lien and security interests on substantially all assets of the Company (subject to permitted liens and other customary exceptions). On July 26, 2022, the Company, in anticipation of the closing of the ETXENERGY East Texas acquisition entered into a letter agreement with FirstBank whereby it increased the borrowing base under the Credit Agreement from $15 million to $20 million.

 

Under the Credit Agreement, revolving loans may be borrowed, repaid and re-borrowed until January 5, 2026, when all outstanding amounts must be repaid. Interest on the outstanding amounts under the Credit Agreement will accrue at an interest rate equal to the greater of (i) the prime rate in effect on such day, and (ii) the Federal Funds rate in effect on such day (as determined in the Credit Agreement) plus 0.50%, and an applicable margin that ranges between 0.25% to 1.25% depending on utilization of the amount of the borrowing base (the “Applicable Margin”). Interest expense recognized on the Credit Agreement and the weighted average interest rates for the three months ended March 31, 2024 and 2023 are presented in the following table:

 

  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Interest expense

 $111  $249 

Weighted average interest rate

  9.1%  8.5%

 

The Credit Agreement contains various restrictive covenants and compliance requirements, which include: (i) maintenance of certain financial ratios, as defined in the Credit Agreement tested quarterly, that limit the Company’s ratio of total debt to EBITDAX (as defined in the Credit Agreement) to 3:1 and require its ratio of consolidated current assets to consolidated current liabilities (as each is described in the Credit Agreement) to remain at 1:1 or higher; (ii) restrictions on making restricted payments as defined in the Credit Agreement, including the payment of cash dividends and repurchases of equity interests (subject to certain limited rights to make restricted payments as long as no event of default has occurred, or would result from the restricted payment, certain financial ratios are met and the borrowing availability after giving pro forma effect to any borrowing to be made on the date of the restricted payment is greater than, or equal to, 20% of the then existing borrowing base); (iii) limits on the incurrence of additional indebtedness; (iv) a prohibition on the entry into commodity swap contracts exceeding a specified percentage of our expected production; and (v) restrictions on the disposition of assets. As of March 31, 2024, the borrowing base was $20 million, and the Company was in compliance with all financial covenants related to the Credit Agreement.

 

The amount outstanding on the Credit Agreement as of March 31, 2024 and December 31, 2023, was $5.0 million.

 

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7. COMMODITY DERIVATIVES

 

The Company’s results of operations and cash flows are affected by changes in market prices for crude oil and natural gas. To manage a portion of its exposure to price volatility from producing crude oil and natural gas, the Company may enter into commodity derivative contracts to protect against price declines in future periods. The Company does not enter into derivative contracts for speculative purposes. The Company does not apply hedge accounting. Accordingly, changes in the fair value of the derivative contracts are recorded in the Condensed Consolidated Statements of Operations and are included as a non-cash adjustment to net income in the operating activities section in the Condensed Consolidated Statements of Cash Flows.

 

As of March 31, 2024, the Company had commodity derivative contracts outstanding as summarized in the tables below:

 

  

Fixed Price Swaps

 
  

Quantity

  

Weighted

 
  

Crude oil

  

Average

 

Commodity/ Index/ Maturity Period

 

(Bbls)(1)

  

Price

 
         

NYMEX WTI

        

Crude Oil 2024 Contracts:

        

Second quarter 2024

  48,600  $81.76 

Third quarter 2024

  45,000  $79.80 

Fourth quarter 2024

  40,720  $78.15 

Total 2024

  134,320  $80.01 

 

(1)

“Bbl” refers to one stock tank barrel, or 42 U.S. gallons liquid volume, used in this report in reference to crude oil or other liquid hydrocarbons.

 

The following table details the fair value of commodity derivative contracts recorded in the accompanying Condensed Consolidated Balance Sheets by category:

 

  

March 31, 2024

  

December 31, 2023

 
  

(in thousands)

 

Derivative assets:

        

Current assets

 $59  $1,844 

Total derivative assets

 $59  $1,844 
         

 

As of March 31, 2024, all commodity derivative contracts held by the Company were subject to a master netting arrangement with its counterparty. The terms of the Company’s derivative agreements provide for offsetting of amounts payable or receivable between it and the counterparty for contracts that settle on the same date. The Company’s agreements also provide that in the event of an early termination, the counterparty has the right to offset amounts owed or owing under that and any other agreement. The Company’s accounting policy is to offset positions when we have a right of offset or master netting arrangement. See Note 13-Fair Value Measurements for disclosure of the fair value of derivative assets and liabilities on a gross and net basis.

 

The following table summarizes the components of the commodity derivative settlement gain (loss) as well as the components of the net commodity derivative (gain) loss line-item presentation in the accompanying Condensed Consolidated Statements of Operations:

 

  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Commodity derivative settlement gain (loss):

        

Oil contracts

 $404  $(378)

Gas contracts

  -   (28)

Total commodity derivative settlement gain (loss)

 $404  $(406)
         

Total net commodity derivative gain (loss):

        

Oil contracts

 $(1,381) $859 

Gas contracts

  -   60 

Total net commodity derivative gain (loss)

 $(1,381) $919 

  
 

8. COMMITMENTS AND CONTINGENCIES

 

Contingencies

 

The Company is subject to litigation and claims arising in the ordinary course of business. The Company accrues for such items when a liability is both probable and the amount can be reasonably estimated. In the opinion of management, the anticipated results of any pending litigation and claims are not expected to have a material effect on the results of operations, the financial position, or the cash flows of the Company.

 
 

9. SHAREHOLDERS’ EQUITY

 

At March 31, 2024, the Company had 25,343,013 shares of common stock outstanding and 245,000,000 authorized. In addition, as of March 31, 2024, the Company had 5,000,000 authorized but unissued shares of preferred stock.

 

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Stock Option Plans

 

From time to time, the Company may grant stock options under its incentive plan covering shares of common stock to employees of the Company. Stock options, when exercised, are settled through the payment of the exercise price in exchange for new shares of stock underlying the option. These awards typically expire ten years from the grant date.

 

For the three months ended March 31, 2024 and 2023, there was no compensation expense related to stock options. As of March 31, 2023, all stock options had vested. No stock options were granted, exercised, or expired during the three months ended March 31, 2024 and 2023.  The stock options had de minimis intrinsic values for the periods reported. Presented below is information for stock options outstanding and exercisable as of March 31, 2024, and December 31, 2023:

 

  

March 31, 2024

  

December 31, 2023

 
      Weighted      Weighted 
      Average      Average 
  Number of  Exercise  Number of  Exercise 
  

Shares

  

Price

  

Shares

  

Price

 
                 

Stock options outstanding and exercisable

  23,176  $38.92   23,176  $38.92 

 

The following table summarizes information for stock options outstanding and for stock options exercisable at March 31, 2024 by the remaining contractual term:

 

Options Outstanding

  

Options Exercisable

 
   

Exercise

  

Weighted

  

Remaining

      

Weighted

 
   

Price

  

Average

  

Contractual

      

Average

 

Number of

  

Range

  

Exercise

  

Term

  

Number of

  

Exercise

 

Shares

  

Low

  

High

  

Price

  

(years)

  

Shares

  

Price

 
                          
16,500  $7.20  $11.60  $10.00   3.5   16,500  $10.00 
5,676   90.00   90.00   90.00   0.8   5,676   90.00 
1,000   226.20   226.20   226.20   0.4   1,000   226.20 
                          
23,176  $7.20  $226.20  $38.92   2.7   23,176  $38.92 

 

Restricted Stock

 

The Company grants restricted stock under its incentive plan covering shares of common stock to employees and directors of the Company.  Significantly all of the restricted stock awards are time-based awards and are amortized ratably over a requisite service period. Time-based awards vest ratably following the grant date, provided the grantee is employed on the vesting date.  The Company has one restricted stock award that vests if the Company's share price is equal to or greater than $2.00 for 20 consecutive trading days within the period beginning March 19, 2025 and ending March 18, 2027.  The grant date fair value of this award is amortized over a derived requisite service period from the fair value model.  Forfeitures of restricted stock awards are recognized as they occur.  Restricted stock granted to employees, when vested, may be settled through the net issuance of shares, reduced by the number of shares required to pay withholding taxes. Non-vested shares of restricted stock are not included in common shares outstanding until vesting has occurred.

 

The following table presents the changes in non-vested restricted stock awards to all employees and directors for the three months ended March 31, 2024:

 

      

Weighted-Avg.

 
      

Grant Date

 
      

Fair Value

 
  

Shares

  

Per Share

 
         

Non-vested restricted stock as of December 31, 2023

  855,236  $2.63 

Granted

  1,299,000  $0.96 

Vested

  (411,041) $2.78 

Forfeited

  (5,500) $2.30 

Non-vested restricted stock as of March 31, 2024

  1,737,695  $1.35 

 

For the three months ended March 31, 2024 and 2023, the Company recognized $0.2 million and $0.7 million, respectively, of stock compensation expense related to restricted stock grants.  Total compensation cost related to non-vested awards not yet recognized in the Company’s Condensed Consolidated Statements of Operations as of March 31, 2024 was $1.6 million. This cost is expected to be recognized over a weighted average period of 1.6 years.

 

Dividends

 

On February 23, 2023, the Company paid a quarterly cash dividend of $0.0225 per share of common stock outstanding to stockholders of record at the close of business on February 10, 2023.  The total amount of dividends paid for the three months ended March 31, 2023 was $0.6 million. On August 9, 2023, the Board of Directors suspended the Company’s dividend payment program.  As a result, no dividends were paid for the three months ended March 31, 2024.

 

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Share Repurchase Program

 

On April 26, 2023, the Board of Directors of the Company authorized and approved a share repurchase program for up to $5.0 million of the outstanding shares of the Company’s common stock.  On March 19, 2024, the Board of Directors authorized and approved an extension of the ongoing share repurchase program.  Subject to any future extensions, the repurchase program is scheduled to expire on the earlier of  June 30, 2025, when a maximum of $5.0 million of the Company’s common stock has been repurchased, or when the program is discontinued by the Board of Directors.

 

Under the stock repurchase program, shares are repurchased from time to time in the open market or through negotiated transactions at prevailing market prices, or by other means in accordance with federal securities laws. Repurchases are 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 stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance. The repurchase program is funded using the Company’s working capital. The repurchased shares are cancelled and therefore will not be held in treasury or reissued.

 

During the three months ended March 31, 2024, the Company repurchased 318,200 shares for $337 thousand, at a weighted average price of $1.06 per share.  There were no share repurchases during the three months ended March 31, 2023.

 
 

10. ASSET RETIREMENT OBLIGATIONS

 

The Company has asset retirement obligations (“ARO”) associated with the future plugging and abandonment of proved properties. Initially, the fair value of a liability for an ARO is recorded in the period in which the ARO is incurred with a corresponding increase in the carrying amount of the related asset. The liability is accreted to its present value each period and the capitalized cost is depleted over the life of the related asset. If the liability is settled for an amount other than the recorded amount, an adjustment to the full cost pool is recognized. The Company had no assets that are restricted for the purpose of settling ARO.

 

In the fair value calculation for the ARO there are numerous assumptions and judgments, including the ultimate retirement cost, inflation factors, credit-adjusted risk-free discount rates, timing of retirement and changes in legal, regulatory, environmental, and political environments. To the extent future revisions to assumptions and judgments impact the present value of the existing ARO, a corresponding adjustment is made to the oil and natural gas property balance.

 

The following is a reconciliation of the changes in the Company’s liabilities for asset retirement obligations as of March 31, 2024 and December 31, 2023:

 

  

March 31, 2024

  

December 31, 2023

 
  

(in thousands)

 

Balance, beginning of year

 $18,490  $15,442 

Acquired or incurred

  -   11 

Cost and life revisions

  (100)  2,494 

Plugged

  (58)  (215)

Sold

  -   (458)

Accretion

  393   1,216 

Balance, end of period

 $18,725  $18,490 
         

Asset retirement obligations - current

 $1,273  $1,273 

Asset retirement obligations - noncurrent

  17,452   17,217 

Balance, end of period

 $18,725  $18,490 

 
 

11. INCOME TAXES

 

The Company’s tax provision or benefit from income taxes for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any. Each quarter the Company updates its estimate of the annual effective tax rate and makes a year-to-date adjustment to the provision. The Company’s effective tax rate was approximately 0% and 5% for the three months ended March 31, 2024 and 2023, respectively. The primary difference in the Company’s effective tax rate and the statutory rate for both periods is related to the movement in the valuation allowance against the Company’s net deferred tax assets.

 

Deferred taxes are recognized for the expected future tax consequences of temporary differences between the financial statement and tax basis of assets, liabilities, net operating losses and tax credit carry-forwards. We review our deferred tax assets (“DTAs”) and valuation allowance on a quarterly basis. As part of our review, we consider positive and negative evidence, including cumulative results in recent years. The Company has limitations on net operating losses (“NOLs”) generated prior to 2022 and other tax attributes as a result of an Internal Revenue Code ("IRC") Section 382 ownership change from a January 5, 2022 acquisition. As such, the Company is projecting that as of March 31, 2024, it will not have sufficient DTAs available to fully offset the expected future taxable income that will be generated by the realization of the Company’s deferred tax liabilities and thus has recorded a net deferred tax liability.

 

The Company recognizes, measures, and discloses uncertain tax positions whereby tax positions must meet a “more-likely-than-not” threshold to be recognized. During the three months ended March 31, 2024 and 2023, no adjustments were recognized for uncertain tax positions.

 
 

12. INCOME (LOSS) PER SHARE

 

Basic net income (loss) per common share is calculated by dividing net income (loss) attributable to common shareholders by the weighted-average number of common shares outstanding for the respective period. Diluted net income per common share is calculated by dividing adjusted net income by the diluted weighted average number of common shares outstanding, which includes the effect of potentially dilutive securities. Potentially dilutive securities for this calculation consist of stock options and unvested shares of restricted common stock, which are measured using the treasury stock method. When the Company recognizes a net loss, all potentially dilutive shares are anti-dilutive and are consequently excluded from the calculation of dilutive net loss per common share. Unvested shares of restricted stock participate in dividend distributions; however, they do not participate in losses.  Therefore, dividends attributable to participating securities are not included as a reduction in the calculation of loss attributable to common shareholders.

 

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The following table sets forth the calculation of basic and diluted net income (loss) per share for the three months ended March 31, 2024 and 2023:

 

  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

(in thousands except per share data)

 

Net income (loss) attributable to common shareholders

 $(9,537) $(1,247)
         

Basic weighted average common shares outstanding

  25,388   25,179 

Dilutive effect of potentially dilutive securities

  -   - 

Diluted weighted average common shares outstanding

  25,388   25,179 
         

Basic net income (loss) per share

 $(0.38) $(0.05)

Diluted net income (loss) per share

 $(0.38) $(0.05)

 

For the three months ended March 31, 2024 and 2023, potentially dilutive securities excluded from the calculation of weighted average shares because they were anti-dilutive were as follows:

 

  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Stock options

  23   28 

Unvested shares of restricted stock

  1,738   1,210 

Total

  1,761   1,238 

 
 

13. FAIR VALUE MEASUREMENTS

 

The Company’s fair value measurements are estimated pursuant to a fair value hierarchy that requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date, giving highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3). In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. The lowest level input that is significant to a fair value measurement in its entirety determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability, and may affect the valuation of the assets and liabilities and their placement within the hierarchy level. The three levels of inputs that may be used to measure fair value are defined as:

 

Level 1 - Quoted prices for identical assets and liabilities traded in active markets.

 

Level 2 - Observable inputs other than Level 1 that are directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in active markets, or other observable inputs that can be corroborated by observable market data.

 

Level 3 - Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

 

While the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The following is a description of the valuation methodologies used for complex financial instruments measured at fair value:

 

Recurring Fair Value Measurements

 

Commodity Derivative Instruments

 

The Company measures the fair value of commodity derivative contracts using an income valuation technique based on the contract price of the underlying positions, crude oil and natural gas forward curves, discount rates, and Company or counterparty non-performance risk. The fixed-price swaps and collar derivative contracts are included in Level 2. The fair value of commodity derivative contracts and their presentation in our unaudited Condensed Consolidated Balance Sheet as of March 31, 2024 and December 31, 2023 are presented below:

 

As of March 31, 2024

                      

Net Fair Value

 
  

Quoted Prices

                  

Presented in the

 
  

in Active Markets

  

Significant Other

  

Significant

          

Unaudited

 
  

for Identical

  

Observable

  

Unobservable

          

Condensed

 
  

Assets

  

Inputs

  

Inputs

  

Total Gross

  

Effect of

  

Consolidated

 
  

(Level 1)

  

(Level 2)

  

(Level 3)

  

Fair Value

  

Netting

  

Balance Sheet

 

(in thousands)

 

Assets

                        

Current:

                        

Commodity derivatives

 $-  $101  $-  $101  $(42) $59 
                         

Liabilities

                        

Current:

                        

Commodity derivatives

 $-  $(42) $-  $(42) $42  $- 
                         

Net commodity derivative instruments

 $-  $59  $-  $59  $-  $59 

 

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As of December 31, 2023

                      

Net Fair Value

 
  

Quoted Prices

                  

Presented in the

 
  

in Active Markets

  

Significant Other

  

Significant

          

Unaudited

 
  

for Identical

  

Observable

  

Unobservable

          

Condensed

 
  

Assets

  

Inputs

  

Inputs

  

Total Gross

  

Effect of

  

Consolidated

 
  

(Level 1)

  

(Level 2)

  

(Level 3)

  

Fair Value

  

Netting

  

Balance Sheet

 

(in thousands)

 

Assets

                        

Current:

                        

Commodity derivatives

 $-  $1,844  $-  $1,844  $-  $1,844 
                         

Net commodity derivative instruments

 $-  $1,844  $-  $1,844  $-  $1,844 

 

Marketable Equity Securities

 

We measure the fair value of marketable equity securities based on quoted market prices obtained from independent pricing services. The Company has an investment in the marketable equity securities of Anfield Energy (“Anfield”), which it acquired as consideration for sales of certain mining operations. Anfield is traded in an active market under the trading symbol AEC:TSXV and has been classified as Level 1.

 

  

March 31, 2024

  

December 31, 2023

 

Current assets:

        

Marketable equity securities

        

Number of shares owned

  2,421,180   2,421,180 

Quoted market price

 $0.07382  $0.06789 
         

Fair value of marketable equity securities

 $178,732  $164,375 

 

Credit Facility

 

The Company’s credit facility approximates fair value because the interest rate is variable and reflective of market rates.

 

Other Financial Instruments

 

The carrying value of financial instruments included in current assets and current liabilities approximate fair value due to the short-term nature of those instruments.

 

Nonrecurring Fair Value Measurements

 

Asset Retirement Obligations

 

The Company measures the fair value of asset retirement obligations as of the date a well is acquired, the date a well begins drilling, or the date the Company revises its ARO assumptions. The Company’s estimated asset retirement obligations are based on historical experience in plugging and abandoning wells, estimated economic lives, estimated plugging and abandonment costs and federal and state regulatory requirements, all unobservable inputs, and therefore, are designated as Level 3 within the valuation hierarchy. The liability is discounted using the credit-adjusted risk-free rate estimated at the time the liability is incurred or revised upwards. The credit adjusted risk-free rate used to discount the Company’s plugging and abandonment liabilities range from 7.30% to 19.00%. See Note 10-Asset Retirement Obligations.

 

Other Assets and Liabilities

 

The Company evaluates the fair value on a non-recurring basis of its Riverton, Wyoming real estate assets when circumstances indicate that the value has been impaired. As of  March 31, 2024, the Company estimated the fair value of its real estate assets based on a market approach, using the value from a binding offer on the real estate assets accepted on February 27, 2024.  The sale closed on April 5, 2024.

 
 

14. OTHER CURRENT ASSETS AND ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

 

Other Current Assets

 

The following table presents the components of other current assets as of the dates indicated:

 

  

March 31, 2024

  

December 31, 2023

 
  

(in thousands)

 

Prepaid expenses

 $598  $88 

Joint interest billings receivable

  248   265 

Income tax receivable

  45   135 

Other

  38   39 
         

Total other current assets

 $929  $527 

 

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Accounts Payable and Accrued Liabilities.

 

The following table presents the components of accounts payable and accrued liabilities as of the dates indicated:

 

  

March 31, 2024

  

December 31, 2023

 
  

(in thousands)

 

Accounts payable

 $2,138  $1,944 

Operating expense and oil and gas property accruals

  832   1,335 

Interest Payable

  112   247 

Production taxes payable

  595   454 

Insurance premium financing

  -   62 

Other

  18   22 
         

Total accounts payable and accrued expenses

 $3,695  $4,064 

 
 

15. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

 

  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Cash paid for interest

 $254  $268 

Cash received for income taxes

  (70)  - 
         

Investing activities:

        

Change in capital expenditure accruals

  -   18 

Asset retirement obligations

  (158)  43 

Financing activities:

        

Accrual for repurchase of common stock

  (59)   

Financing of insurance premiums with note payable

  -   654 

 
 

16. SUBSEQUENT EVENTS

 

Derivative Activities

 

On April 2, 2024, the Company entered into crude oil swap agreements, agreeing to pay monthly the average NYMEX WTI price for the month of settlement and receive a fixed price.  The contracts are for a total of 164,125 barrels of oil, extending from January 2025 to December 2025 with a weighted average fixed price of $73.71.

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Introduction

 

This information should be read in conjunction with the interim unaudited financial statements and the notes thereto included in this Quarterly Report on Form 10-Q, and the audited financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on March 26, 2024 (the “Annual Report”).

 

Certain abbreviations and oil and gas industry terms used throughout this Report are described and defined in greater detail under “Glossary of Oil and Natural Gas Terms” on page 4 of our Annual Report.

 

Certain capitalized terms used below and otherwise defined below, have the meanings given to such terms in the footnotes to our unaudited Condensed Consolidated Financial Statements included above under “Part I - Financial Information” – “Item 1. Financial Statements”.

 

In this Quarterly Report on Form 10-Q, we may rely on and refer to information regarding the industries in which we operate in general from market research reports, analyst reports and other publicly available information. Although we believe that this information is reliable, we cannot guarantee the accuracy and completeness of this information, we have not independently verified any of it, and we have not commissioned any such information.

 

See also “Cautionary Statement About “Forward-Looking Statements” above.

 

Unless the context requires otherwise, references to the “Company,” “we,” “us,” “our,” “U.S. Energy”, and “U.S. Energy Corp.” refer specifically to U.S. Energy Corp. and its consolidated subsidiaries.

 

In addition, unless the context otherwise requires and for the purposes of this report only:

 

●

“Bbl” refers to one stock tank barrel, or 42 U.S. gallons liquid volume, used in this report in reference to crude oil or other liquid hydrocarbons;
 

 

●

“BOE” refers to barrels of oil equivalent, determined using the ratio of one Bbl of crude oil, condensate or natural gas liquids, to six Mcf of natural gas;
 

 

●

“Bopd” refers to barrels of oil per day;
 

 

●

“Mcf” refers to a thousand cubic feet of natural gas;
 

 

●

“Mcfe” means 1,000 cubic feet equivalent, determined using the ratio of six Mcf of natural gas to one Bbl of crude oil, condensate or natural gas liquids;
 

 

●

“NGL” refers to natural gas liquids;
 

 

●

“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;
 

 

●

“SEC” or the “Commission” refers to the United States Securities and Exchange Commission;
 

 

●

“Securities Act” refers to the Securities Act of 1933, as amended; and
 

 

●

“WTI” means West Texas Intermediate.

 

Where You Can Find Other Information

 

We file annual, quarterly, and current reports, proxy statements and other information with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC like us at https://www.sec.gov (our filings can be found at https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000101594) and on the “Investors – SEC Filings” page of our website at https://usnrg.com. Copies of documents filed by us with the SEC are also available from us without charge, upon oral or written request to our Secretary, who can be contacted at the address and telephone number set forth on the cover page of this Report.

 

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Summary of The Information Contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying unaudited Condensed Consolidated Financial Statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. MD&A is organized as follows:

 

 

●

General Overview. A general overview of the Company and our operations.
   

 
 

●

Recent Developments. Discussion of recent developments affecting the Company and our operations.
   

 
 

●

Plan of Operations and Strategy. Discussion of our strategy moving forward and how we plan to seek to increase stockholder value.
   

 
 

●

Critical Accounting Policies and Estimates. Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.
   

 
 

●

Results of Operations. An analysis of our financial results comparing the three months ended March 31, 2024 and 2023.
   

 
 

●

Liquidity and Capital Resources. A discussion of our financial condition, including descriptions of balance sheet information and cash flows.

 

General Overview

 

U.S. Energy Corp. was incorporated in the State of Wyoming on January 26, 1966, and reincorporated to Delaware effective on August 3, 2022. We are an independent energy company focused on the acquisition and development of oil and natural gas producing properties in the continental United States. Our principal properties and operations are in the Rockies region (Montana, Wyoming and North Dakota), the Mid-Continent region (Oklahoma, Kansas, and North and East Texas), and the West Texas, South Texas, and Gulf Coast region.

 

We have historically explored for and produced oil and natural gas through a non-operator business model, however, during 2020 we acquired operated properties in North Dakota, New Mexico, Wyoming, and the Texas Gulf Coast, and on January 5, 2022, we closed the acquisitions of certain oil and gas properties from three separate sellers, representing a diversified portfolio of primarily operated, producing, oil-weighted assets located across the Rockies, West Texas, South Texas, and Mid-Continent regions.  During the fourth quarter of 2023, we sold virtually all of our non-operated properties and as of December 31, 2023, operated 99% of our reserves.

 

Our business strategy going forward is to enhance the value of our acquired operated assets through evaluation of selected properties with the goal of increasing production and reserves. We plan to deploy our capital in a conservative and strategic manner and pursue value-enhancing transactions. We also continue to evaluate strategic alternative opportunities that we believe will enhance stockholder value.

 

Material Developments

 

Divestment of Properties

 

In the fourth quarter of 2023, the Company closed on a series of individual divestitures for a total of $7.0 million in net proceeds before transaction costs of $0.4 million. The divestitures included the Company’s non-operated interests in 152 wells across North Dakota, New Mexico, and Texas, and overriding royalty interests in seven wells in Karnes County, Texas. These divestitures did not have a significant impact to reserves volumes or the full cost pool depletion rate. As such, the Company recorded the proceeds, net of transaction costs and purchase price adjustments, to the full cost pool with no gain or loss recognized. Relief of associated asset retirement obligations of $0.5 million were also recorded to the full cost pool.  The net proceeds from these divestitures were used to repay a portion of the outstanding balance on our credit facility, bringing the balance as of December 31, 2023 to $5.0 million.

 

Derivative Activities

 

On September 12, 2023, the Company entered into crude oil swap agreements, agreeing to pay the monthly average NYMEX WTI price the month of settlement and receive a fixed price. The contracts were for a total of 187,620 barrels of oil, extending from October 2023 through December 2024 with weighted average prices of $86.64 for the 2023 swaps and $81.16 for the 2024 swaps.  In addition, on April 2, 2024, the Company entered into crude oil swap agreements, agreeing to pay monthly the average NYMEX WTI price for the month of settlement and receive a fixed price.  The contracts are for a total of 164,125 barrels of oil, extending from January 2025 to December 2025 with a weighted average fixed price of $73.71.

 

Dividends

 

On February 23, 2023 and May 30, 2023, the Company paid a quarterly cash dividend of $0.0225 per share of common stock outstanding to stockholders of record at the close of business on February 10, 2023 and May 19, 2023. Total dividends paid during 2023 were $1.2 million. The Board of Directors suspended the Company’s dividend payment policy on August 9, 2023.

 

Stock Repurchase Program

 

On March 19, 2024, the Board of Directors authorized and approved an extension of the ongoing share repurchase program for up to $5.0 million of the currently outstanding shares of the Company’s common stock originally approved by the Board of Directors on April 26, 2023, and set to expire on June 30, 2024.  Subject to any future extension in the discretion of the Board of Directors of the Company, the repurchase program is now scheduled to expire on June 30, 2025, or when a maximum of $5.0 million of the Company’s common stock has been repurchased, or when such program is discontinued by the Board of Directors.

 

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Under the stock repurchase program, shares may be repurchased from time to time in the open market or through negotiated transactions at prevailing market prices, 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 stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance. The repurchase program will be funded using the Company’s working capital.

 

During the three months ended March 31, 2024, the Company repurchased 318,200 shares for $337 thousand, at a weighted average price of $1.06 per share.  There were no share repurchases during the three months ended March 31, 2023.  As of March 31, 2024, a total of $4.2 million remained available under the repurchase program for future repurchases. 

 

Full Cost Method Ceiling Test

 

The reserves used in the ceiling test incorporate assumptions regarding pricing and discount rates over which management has no influence in the determination of present value. In the calculation of the ceiling test as of March 31, 2024, the Company used $77.48 per barrel for oil and $2.45 per one million British Thermal Units (MMbtu) for natural gas (as further adjusted for property, specific gravity, quality, local markets and distance from markets) to compute the future cash flows of the Company’s producing properties. The discount factor used was 10%.

 

The Company recorded a $5.4 million ceiling test write-down of its oil and gas properties during the three months ended March 31, 2024, due to a reduction in the value of proved oil and natural gas reserves primarily as a result of a decrease in crude oil and natural gas prices, as well as reserves revisions related to wells shut-in during the first quarter of 2024 and updates to the decline curves for certain wells.

 

Depending on actual commodity prices, estimated price differentials, lease operating costs, revisions to reserve estimates, and the amount and timing of capital expenditures, additional write-downs could be incurred in the future.

 

Plan of Operations and Strategy

 

Continuing through the end of 2024 and beyond, we intend to seek additional opportunities in the oil and natural gas sector, including but not limited to workover and stimulating inactive wells, participation with current and new industry partners in their exploration and development projects, acquisition of existing companies, and the purchase of oil and natural gas producing assets. In addition, from time to time, we evaluate growth opportunities on operated idle wells and plan to perform workovers that we believe are economic in order to return the wells to production.

 

Key elements of our business strategy include:

 

 

●

Deploy our Capital in a Conservative and Strategic Manner and Review Opportunities to Bolster our Liquidity. In the current industry environment, maintaining liquidity is critical. Therefore, we plan to be highly selective in the projects we evaluate and plan to review opportunities to bolster our liquidity and financial position through various means.
   

 
 

●

Evaluate and Pursue Value-Enhancing Transactions. We plan to continue to evaluate strategic alternative opportunities with the goal of enhancing shareholder value.

 

Critical Accounting Policies and Estimates

 

The preparation of our unaudited Condensed Consolidated Financial Statements in conformity with generally accepted accounting principles in the United States (“GAAP”) requires us to make assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the disclosure of contingent assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates under different assumptions or conditions. A summary of our significant accounting policies is detailed in Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2023 Annual Report on Form 10-K filed with the SEC on March 26, 2024.

 

Results of Operations

 

Comparison of our Statements of Operations for the Three Months Ended March 31, 2024 and 2023

 

For the three months ended March 31, 2024, we recorded a net loss of $9.5 million, which was primarily due to oil and natural gas property impairment expense of $5.4 million from reduced commodity prices used in the full cost pool ceiling test and lower production resulting in reduced revenue for the period.  In the following sections we discuss our revenue, operating expenses, and other income (expense) for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

 

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Revenue. Presented below is a comparison of our oil and gas sales, production quantities and average sales prices for the three months ended March 31, 2024 and 2023:

 

   

Three months ended March 31,

    

Change

  
   

2024

    

2023

    

Amount

    

Percent

  
   

(in thousands except average prices and production quantities)

  

Revenue:

                                

Oil

   $ 4,727     $ 7,095     $ (2,368 )     (33 )%

Natural gas and liquids

     664       1,177       (513 )     (44 )%
                                 

Total revenue

   $ 5,391     $ 8,272     $ (2,881 )     (35 )%
                                 

Production quantities:

                                

Oil (Bbls)

     68,599       91,311       (22,712 )     (25 )%

Natural gas and liquids (Mcfe)

     247,209       384,031       (136,822 )     (36 )%

BOE

     109,800       155,316       (45,516 )     (29 )%

BOE/Day

     1,207       1,726       (519 )     (30 )%
                                 

Average sales prices:

                                

Oil (Bbls)

   $ 68.91     $ 77.70     $ (8.79 )     (11 )%

Natural gas and liquids (Mcfe)

   $ 2.69     $ 3.06     $ (0.38 )     (12 )%

BOE

   $ 49.10     $ 53.26     $ (4.16 )     (8 )%

 

The decrease in our oil and gas revenue of $2.9 million for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to a decrease of 29% in production quantities, as well as a decrease in realized commodity pricing of 8% on a per BOE basis. For the three months ended March 31, 2024, we produced 109,800 BOE, or an average of 1,207 BOE per day, as compared to 155,316 BOE or an average of 1,726 BOE per day during the comparable period in 2023. The decrease in our production quantities relates to the divestiture of substantially all of our non-operated properties in the fourth quarter of 2023, as well as temporary weather-related events, such as flooding and winter weather, and natural production declines. During the three months ended March 31, 2024, our production was 62% oil and 38% natural gas and liquids compared to 59% oil and 41% natural gas and liquids produced during the three months ended March 31, 2023.

 

Oil and Gas Production Costs. Presented below is a comparison of our oil and gas production costs for the three months ended March 31, 2024 and 2023:

 

   

Three months ended March 31,

    

Change

  
   

2024

    

2023

    

Amount

    

Percent

  
   

(in thousands)

  

Lease operating expenses

   $ 3,186     $ 4,409     $ (1,223 )     (28 )%

Gathering, transportation and treating

     64       114     $ (50 )     (44 )%

Production taxes

     343       520     $ (177 )     (34 )%
                                 

Total

   $ 3,593     $ 5,043     $ (1,450 )     (29 )%
                                 

Lease operating expense per BOE

   $ 29.02     $ 28.39     $ 0.63       2 %

Gathering, transportation and treating per BOE

   $ 0.58     $ 0.73     $ (0.15 )     (21 )%

 

For the three months ended March 31, 2024, lease operating expenses were $3.2 million or $29.02 per BOE, a decrease of $1.2 million when compared to the $4.4 million or $28.39 per BOE for the three months ended March 31, 2023. The decrease in lease operating expense was due almost entirely to a reduction in well workover activity in 2024 when compared to 2023. The increase on a per BOE basis is the result of lower production volumes being compared to relatively fixed recurring lease operated expenses.

 

For the three months ended March 31, 2024, gathering, transportation, and treating costs were $64 thousand, a decrease of $50 thousand, or 44%, compared to the comparable period of 2023. This decrease was attributable to the divestiture of substantially all of our non-operated activities in the fourth quarter of 2023.

 

For the three months ended March 31, 2024, production taxes were $343 thousand, a decrease of $177 thousand, or 34%, compared to the comparable period of 2023. This decrease was attributable to the decrease in revenue of 35% discussed above as production taxes remained flat at 6% of revenue.

 

Depreciation, Depletion and Amortization. Our depreciation, depletion and amortization (“DD&A”) was $2.2 million and $2.4 million for the three months ended March 31, 2024 and 2023, respectively. Depletion expense on our oil and gas properties is the primary driver of DD&A expense.  Our depletion rate was $15.90 per BOE and $13.52 per BOE for the three months ended March 31, 2024 and 2023, respectively. Our depletion rate can fluctuate because of acquisitions, changes in drilling and completion costs, impairments, revisions in asset retirement obligation cost estimates or timing, divestitures, changes in the mix of our production, the underlying proved reserve volumes and estimated future development costs.

 

Impairment of oil and natural gas properties.  Impairment of $5.4 million was driven by a reduction in value of oil and gas reserves.  The reduction was primarily due to lower commodity prices used in the full cost pool ceiling test, as well as reserves revisions related to wells shut-in during the first quarter of 2024 and updates to the decline curves for certain wells.

 

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General and Administrative Expenses. Presented below is a comparison of our general and administrative expenses for the three months ended March 31, 2024 and 2023:

 

   

Three months ended March 31,

    

Change

  
   

2024

    

2023

    

Amount

    

Percent

  
   

(in thousands)

  

Compensation and benefits

   $ 1,172     $ 1,187     $ (15 )     (1 )%

Stock-based compensation

     200       727       (527 )     (72 )%

Professional fees, insurance and other

     834       858       (24 )     (3 )%
                                 

Total general and administrative expenses

   $ 2,206     $ 2,772     $ (566 )     (20 )%

 

General and administrative expenses decreased by $566 thousand for the three-month period ended March 31, 2024, as compared to the prior year period. The decrease was primarily attributable to a decrease stock-based compensation expense.  The value of the restricted stock awards being amortized for the three months ended March 31, 2024 was lower than those being amortized during the three months ended March 31, 2023.

 

Other Income (Expense). Presented below is a comparison of our other income (expense) for the three months ended March 31, 2024 and 2023:

 

   

Three months ended March 31,

    

Change

  
   

2024

    

2023

    

Amount

    

Percent

  
   

(in thousands)

  

Commodity derivative gain (loss), net

   $ (1,381 )   $ 919     $ (2,300 )     (250 )%

Interest (expense), net

     (120 )     (268 )     148       (55 )%

Other income (expense), net

     4       -       4       0 %
                                 

Total other income (expense)

   $ (1,497 )   $ 651     $ (2,148 )     (330 )%

 

Commodity derivative gain (loss), net, is the result of changes in derivative fair values associated with fluctuations in forward price curves for the commodities underlying our outstanding derivative contracts and the monthly cash settlements of our derivative positions during the period. For the three months ended March 31, 2024, we recognized losses on commodity derivative contracts of $1.4 million, primarily as the result of a decrease in the fair value of our outstanding commodity derivative contracts from settlements of open positions and higher WTI prices as compared to December 31, 2023. See Note 7 Commodity Derivatives in the notes to the unaudited Condensed Consolidated Financial Statements.

 

Interest expense primarily represents the interest on our credit facility with FirstBank Southwest. The decrease in interest expense is primarily driven by the decrease in the balance outstanding period over period.  As of March 31, 2024, we had borrowed $5.0 million on the credit facility as compared to $12.0 million borrowed as of March 31, 2023. The average interest rate increased to 9.1% per annum for the three months ended March 31, 2024, as compared to 8.5% per annum for the three months ended March 31, 2023. See Note 6 Debt in the notes to the unaudited Condensed Consolidated Financial Statements.

 

Liquidity and Capital Resources

 

Based on the current commodity price environment, we believe we have sufficient liquidity and capital resources to execute our business plan while continuing to meet our current financial obligations. We continue to manage our commitments in order to maintain flexibility with regard to our activity level and capital expenditures.

 

We have a 2024 capital budget of $2.4 million. Our capital budget is typically comprised of return to production workovers, repairs and maintenance, plugging and abandonment costs, and similar activities to support our asset base. We view some of these investments as discretionary for which we can control both the timing and amount of these expenditures. Other activities, such as some repairs and maintenance and plugging activities, may be required from time to time by regulatory bodies.  We also expect to incur approximately $0.2 million on lease commitments and approximately $0.5 million on interest expense assuming no material changes to interest rates over the next 12 months and the outstanding balance of our credit facility remains at $5.0 million. We anticipate our expenditures will be funded primarily by operating cash flows. In the event that our operating cash flows are not sufficient to fund these expenditures, we have access to our credit facility and equity markets if such a need arises.

 

Sources of Cash

 

For the three months ended March 31, 2024, we funded our capital expenditures with cash on hand and cash flows from operating activities. In future quarters, if cash flows are not sufficient to fund our capital expenditures and operations, we may also use borrowings under our credit facility or raise funds through new equity offerings or from other sources of financing and re-evaluate our capital spend program as economic conditions warrant. Additionally, we may enter into carrying cost and sharing arrangements with third parties for certain development programs. All of our sources of liquidity can be affected by the changes in economic conditions, rising interest rate, changes in debt and equity markets, force majeure events, fluctuations in commodity prices, operating costs, tax law changes, and volumes produced, all of which would affect us and our industry.

 

We have no control over the market prices for oil and gas, although we may be able to influence the amount of our realized revenues from oil and gas through the use of commodity derivative contracts as part of our commodity price risk management program. Commodity derivative contracts may limit the prices we receive from our oil and gas sales if oil and gas prices rise substantially over the price established by the commodity derivative contract. See Note 7- Commodity Derivatives in Part I, Item 1 of this report for additional information about our oil and gas commodity derivative contracts currently in place and the timing of the settlement of those contracts.

 

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Credit Agreement

 

On January 5, 2022, we entered into a four-year credit agreement with FirstBank Southwest as administrative agent, which provides for a revolving line of credit with a borrowing base of $20 million, and a maximum credit amount of $100 million (the “Credit Agreement”). Under the Credit Agreement, revolving loans may be borrowed, repaid and re-borrowed until January 5, 2026, when all outstanding amounts must be repaid. The Credit Agreement contains customary indemnification requirements, representations and warranties and customary affirmative and negative covenants applicable to the Company and its subsidiaries. In addition, the Credit Agreement contains financial covenants, tested quarterly, that limit our ratio of total debt to EBITDAX (as defined in the Credit Agreement) to 3:1 and require our ratio of consolidated current assets to consolidated current liabilities (as each is described in the Credit Agreement) to remain at 1:1 or higher. We were in compliance with all financial covenants as of March 31, 2024. Please refer to Note 6 - Debt in Part I, Item 1 of this report for additional discussion.

 

The borrowing base is subject to being redetermined semi-annually, commencing on or about April 1 and October 1 of each year during the four-year term of the Credit agreement.  Our borrowing base can be adjusted as a result of changes in commodity prices, acquisitions or divestitures of proved properties, or financing activities, all as provided for in the Credit Agreement.

 

Cash flows provided by our operating activities, proceeds received from divestitures of properties, capital markets activities, and our capital expenditures, including acquisitions, all impact the amount we borrow under our revolving Credit Agreement. The amount outstanding on the Credit Agreement as of March 31, 2024, was $5.0 million.

 

Uses of Cash

 

We use cash for the acquisition and development of oil and gas properties, workovers and capital expenditures, operating and general and administrative costs, settlements of commodity derivative contracts, debt obligations including interest, and share repurchases.  During the three months ended March 31, 2024, we spent approximately $0.1 million on capital expenditures.

 

The amount and allocation of our future capital expenditures will depend upon a number of factors, including our cash flows from operating, investing, and financing activities, our ability to execute our development program, and the number and size of acquisitions that we complete. In addition, the impact of oil and gas prices on investment opportunities, the availability of capital, tax law changes, and the timing and results of our development activities may lead to changes in funding requirements for future development. We periodically review our capital expenditure budget to assess if changes are necessary based on current and projected cash flows, acquisition and divestiture activities, and other factors. We will continue to monitor the economic environment through the remainder of the year and adjust our activity level as warranted.

 

Cash Flows

 

The following table summarizes our cash flows for the three months ended March 31, 2024 and 2023:

 

   

Three months ended March 31,

          
   

2024

    

2023

    

Change

  
   

(in thousands)

          

Net cash provided by (used in):

                        

Operating activities

   $ (603 )   $ 236     $ (839 )

Investing activities

     (179 )     (1,367 )     1,188  

Financing activities

     (563 )     (859 )     296  

 

Operating Activities. Cash used in operating activities for the three months ended March 31, 2024 was $0.6 million as compared to cash provided by operating activities of $0.2 million for the comparable period in 2023. The decrease in cash provided by operating activities is mainly attributable to a reduction in cash receipts from revenues as a result of a decrease in production during the first quarter of 2024 and payment of expenses in the first quarter of 2024 that were accrued for in the fourth quarter of 2023.

 

Investing Activities. Cash used in investing activities for the three months ended March 31, 2024 was $0.2 million as compared to $1.4 million for the comparable period in 2023. The primary use of cash in our investing activities for the three months ended March 31, 2024 was capital expenditures.  For the three months ended March 31, 2023, the primary use of cash in our investing activities was capital expenditures related to returning idle wells to productions and improvements to our gathering system in East Texas.

 

Financing Activities. Cash used in financing activities for the three months ended March 31, 2024 was $0.6 million as compared to $0.9 million for the comparable period in 2023. Cash used in financing activities during the three months ended March 31, 2024 was primarily attributable to share repurchases of $0.4 million. Cash used in financing activities during the three months ended March 31, 2023 primarily related to cash dividends paid of $0.6 million.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

 

Item 4. Controls and Procedures

 

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

 

We are required to maintain disclosure controls and procedures (as defined by Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

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As of March 31, 2024, our management, including our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on the results of the evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls were not effective as of March 31, 2024 to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. Such determination was made due to a material weakness in our internal control over financial reporting as of December 31, 2023, as discussed below.

 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 26, 2024, in connection with our assessment of the effectiveness of our internal control over financial reporting at the end of our last fiscal year, management identified a material weakness in our internal control over financial reporting as of December 31, 2023.  Specifically, our accounting system was not designed appropriately, and reliance could not be placed on some of the control elements of the accounting system. These control elements include a lack of certain functionality related to system-based account reconciliations, missing systematic controls in areas such as segregation of duties enforcement and data input validation, and an absence of independent evaluation of third-party information technology controls (" ITGCs").  The Company's manual review controls partially compensate for the system design limitations, but this material weakness cannot be remediated without the implementation of a system-based solution.

 

Limitations on Effectiveness of Controls and Procedures

 

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

 

Changes in Internal Control over Financial Reporting

 

Except as disclosed below there were no changes in our internal control over financial reporting during the three months ended March 31, 2024, that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

 

As of March 31, 2024, we are evaluating our options with respect to a new accounting system and have not concluded as to the system or the time of an implementation.

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. We are not currently involved in any legal proceedings that we believe could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future.

 

Item 1A. Risk Factors.

 

There have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 26, 2024, under the heading “Item 1A. Risk Factors”, except as discussed below, and investors should review the risks provided in the Annual Report, prior to making an investment in the Company. The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in the Annual Report, under “Item 1A. Risk Factors”, and below, any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price.

 

Our stock repurchases are discretionary and even if effected, they may not achieve the desired objectives.

 

On March 19, 2024, the Board of Directors authorized and approved an extension of the ongoing share repurchase program for up to $5.0 million of the currently outstanding shares of the Company’s common stock originally approved by the Board of Directors on April 26, 2023, and set to expire on June 30, 2024. Subject to any future extension in the discretion of the Board of Directors of the Company, the repurchase program is now scheduled to expire on June 30, 2025, or when a maximum of $5.0 million of the Company’s common stock has been repurchased, or when such program is discontinued by the Board of Directors. 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 are 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 stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance. During the three months ended March 31, 2024, the Company repurchased 318,200 shares for $337 thousand, at a weighted average price of $1.06 per share, in open market transactions. The program does not obligate the Company to acquire a minimum amount of shares.

 

There can be no assurance that any repurchases pursuant to our stock repurchase program will enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchase such shares. The amounts and timing of the repurchases may also be influenced by general market conditions, regulatory developments (including recent legislative actions which, subject to certain conditions, may impose an excise tax of 1% on our stock repurchases) and the prevailing price and trading volumes of our common stock. If our financial condition deteriorates or we decide to use our cash for other purposes, we may suspend repurchase activity at any time.

 

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Table of Contents

 

We may enter into strategic transactions in the future which may result in a material change in our operations and/or a change of control.

 

In the future, we or our majority stockholders, may enter into transactions with, or undertake transactions with, parties seeking to merge and/or acquire us and/or our operations. While neither we, nor our majority stockholders have entered into any such agreements or understandings to date, in the event that we or our majority stockholders do enter into such a transaction or transactions in the future, it could result in a change in our business focus, the acquisition of significant amounts of our outstanding common stock, or a change in our majority stockholders. We and our majority stockholders have not entered into any agreements relating to any strategic transaction involving the Company as of the date of this filing and may never enter into such agreement(s) in the future. Any future strategic transaction involving the Company or its operations may have a material effect on our operations, cash flows, results of operations, prospects, plan of operations, the listing of our common stock on the Nasdaq Capital Market, our officers, directors and majority stockholders, and the value of our securities.

 

We have written down, and may in the future be forced to further write-down, material portions of our assets due to low oil and natural gas prices.

 

The full cost method of accounting is used for oil and gas acquisition, exploration, development and production activities. Under the full cost method, all costs associated with the acquisition, exploration, and development of oil and natural gas properties are capitalized and accumulated in a country-wide cost center. This includes any internal costs that are directly related to development and exploration activities, but does not include any costs related to production, general corporate overhead, or similar activities. Proceeds received from disposals are credited against accumulated cost, except when the sale represents a significant disposal of reserves, in which case a gain or loss is recognized. The sum of net capitalized costs and estimated future development and dismantlement costs for each cost center is depleted on the equivalent unit-of-production method, based on proved oil and natural gas reserves. Excluded from amounts subject to depreciation, depletion, and amortization are costs associated with unevaluated properties.

 

Under the full cost method, net capitalized costs are limited to the lower of (a) unamortized cost reduced by the related net deferred tax liability and asset retirement obligations, and (b) the cost center ceiling. The cost center ceiling is defined as the sum of (i) estimated future net revenue, discounted at 10% per annum, from proved reserves, based on unescalated costs, adjusted for contract provisions, any financial derivatives qualifying as accounting hedges and asset retirement obligations, and unescalated oil and natural gas prices during the period, (ii) the cost of properties not being amortized, and (iii) the lower of cost or market value of unproved properties included in the cost being amortized, less income tax effects related to tax assets directly attributable to the natural gas and crude oil properties. If the net book value reduced by the related net deferred income tax liability and asset retirement obligations exceeds the cost center ceiling limitation, a non-cash impairment charge is required in the period in which the impairment occurs.

 

We perform a quarterly ceiling test for our only oil and natural gas cost center, which is the United States. During 2023 we recorded ceiling test write-downs of $26.7 million. The ceiling test incorporates assumptions regarding pricing and discount rates over which we have no influence in the determination of present value. In arriving at the ceiling test for the year ended December 31, 2023, we used an average price applicable to our properties of $78.22 per barrel for oil and $2.64 per Mcfe for natural gas, based on average prices per barrel of oil and per Mcfe of natural gas at the first day of each month of the 12-month period prior to the end of the reporting period, to compute the future cash flows of each of the producing properties at that date.

 

In the calculation of the ceiling test as of March 31, 2024, the Company used $77.48 per barrel for oil and $2.45 per one million British Thermal Units (MMbtu) for natural gas (as further adjusted for property, specific gravity, quality, local markets and distance from markets) to compute the future cash flows of the Company’s producing properties. The discount factor used was 10%.  The Company recorded a $5.4 million ceiling test write-down of its oil and gas properties during the three months ended March 31, 2024, due to a reduction in the value of proved oil and natural gas reserves primarily as a result of a decrease in crude oil and natural gas prices, as well as reserves revisions related to wells shut-in during the first quarter of 2024 and decline curve updates.

 

Depending on actual commodity prices, estimated price differentials, lease operating costs, revisions to reserve estimates, and the amount and timing of capital expenditures, additional write-downs could be incurred in the future.

 

Material write-downs or impairments of our oil and gas properties have in the past and may in the future have a material adverse effect on our assets and/or our financial condition, either of which may cause the value of our securities to decline in value.

 

The Company’s operations have in the past been, and could in the future be, disrupted by natural or human causes beyond its control.

 

The Company’s operations are subject to disruption from natural or human causes beyond its control, including risks from hurricanes, severe storms, floods, lightning strikes, heat waves, other forms of severe weather, wildfires, ambient temperature increases, sea level rise, war, accidents, civil unrest, political events, fires, earthquakes, system failures, cyber threats, terrorist acts and epidemic or pandemic diseases such as the COVID-19 pandemic, some of which may be impacted by climate change and any of which could result in suspension of operations or harm to people or the natural environment. For example, during the three months ended March 31, 2024, decreases in our production quantities compared to the three months ended March 31, 2023, related to temporary weather-related events such as flooding and winter weather.  Any of the above events could have a future material adverse effect on the Company’s results of operations or financial condition.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

Sales of Unregistered Securities

 

There have been no sales of unregistered securities during the quarter ended March 31, 2024, and from the period from April 1, 2024, to the filing date of this Report.

 

24
Table of Contents

 

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

 

The following table sets forth share repurchase activity for the respective periods:

 

                   

Total Number

    

Approximate

  
                   

of Shares

    

Dollar Value of

  
                   

Purchased as

    

Shares that

  
                   

Part of

    

May Yet Be

  
                   

Publicly

    

Purchased

  
   

Total Number

    

Average

    

Announced

    

Under the

  
   

of Shares

    

Price Paid Per

    

Plans or

    

Plans or

  

Period

  

Purchased

    

Share

    

Programs(1)

    

Programs(1)

  

January 1- January 31, 2024

     242,600     $ 1.07       242,600     $ 4,332,523  

February 1 - February 29, 2024

     75,600     $ 1.03       75,600     $ 4,229,203  

March 1 - March 31, 2024

     —     $ —       —     $ 4,229,203  

Total

     318,200     $ 1.06       318,200     $ 4,229,203  

 

(1) On March 19, 2024, the Board of Directors authorized and approved an extension of the ongoing share repurchase program for up to $5.0 million of the currently outstanding shares of the Company’s common stock originally approved by the Board of Directors on April 26, 2023, and set to expire on June 30, 2024. Subject to any future extension in the discretion of the Board of Directors of the Company, the repurchase program is now scheduled to expire on June 30, 2025, or when a maximum of $5.0 million of the Company’s common stock has been repurchased, or when such program is discontinued by the Board of Directors. 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 are 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 stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance. The repurchase program is funded using the Company’s working capital. The program does not obligate the Company to acquire a minimum amount of shares.

 

 

Item 3. Defaults Upon Senior Securities.

 

Not applicable.

 

 

Item 4. Mine Safety Disclosures.

 

Not applicable.   

 

 

Item 5. Other Information.

 

Rule 10b5-1(c) Trading Plans. Our directors and executive officers may from time to time enter into plans or other arrangements for the purchase or sale of our shares that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or may represent a non-Rule 10b5-1 trading arrangement under the Exchange Act. During the quarter ended March 31, 2024, none of the Company’s directors or officers (as defined in Rule 16a-1(f)) adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

 

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Table of Contents
 
 

Item 6. Exhibits

 

Exhibit No.

  

Description

  

Form

  

File No.

  

Exhibit

  

Filing Date

  

Filed /
Furnished Herewith

10.1†

   U.S. Energy Corp. Form of Restricted Stock Grant Agreement – Ryan L. Smith (170,000 shares grant – March 19, 2024) (2022 Equity Incentive Plan)  

8-K

  

000-06814

   10.1  

3/21/2024

    

10.2†

  

U.S. Energy Corp. Form of Restricted Stock Grant Agreement (2022 Equity Incentive Plan)

  

S-8

   333-267267  

4.3

   9/2/2023    

31.1*

  

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes – Oxley Act of 2002

                  

X

31.2*

  

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes – Oxley Act of 2002

                  

X

32.1♦

  

Certification of Chief Executive Officer under Rule 13a-14(b)

                  

X

32.2♦

  

Certification of Chief Financial Officer under Rule 13a-14(b)

                  

X

101.INS

  

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

                  

X

101.SCH*

  

Inline XBRL Schema Document

                  

X

101.CAL*

  

Inline XBRL Calculation Linkbase Document

                  

X

101.DEF*

  

Inline XBRL Definition Linkbase Document

                  

X

101.LAB*

  

Inline XBRL Label Linkbase Document

                  

X

101.PRE*

  

Inline XBRL Presentation Linkbase Document

                  

X

104*

  

Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set

                  

X

 

*

Filed herewith.
 

 

†

Exhibit constitutes a management contract or compensatory plan or agreement.
 

 

♦

Furnished herewith.

 

26
Table of Contents

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

U.S. ENERGY CORP.
     

Date: May 9, 2024

By:  

/s/ Ryan L. Smith
   

RYAN L. SMITH,

Chief Executive Officer (Principal Executive Officer)
     

Date: May 9, 2024

By:

/s/ Mark L. Zajac
   

MARK L. ZAJAC,

Chief Financial Officer (Principal Financial and Accounting Officer)

 

27

Exhibit 31.1

 

CERTIFICATION

 

I, Ryan L. Smith, certify that:

 

1.

I have reviewed this Quarterly Report on Form 10-Q of U.S. Energy Corp.;
   

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this report;
   

4.

I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
 

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
 

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
     

5.

I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
   
 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 9, 2024

 

 

By:  

/s/ Ryan L. Smith
   

Ryan L. Smith
   

Chief Executive Officer

(Principal Executive Officer)

 

 

Exhibit 31.2

 

CERTIFICATION

 

I, Mark L. Zajac, certify that:

 

1.

I have reviewed this Quarterly Report on Form 10-Q of U.S. Energy Corp.;
   

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this report;
   

4.

I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
     
 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
 

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
 

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
     

5.

I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
     
 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 9, 2024

    
     
 

By:  

/s/ Mark L. Zajac
   

Mark L. Zajac
   

Chief Financial Officer
   

(Principal Financial and Accounting Officer)

 

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report on Form 10-Q of U.S. Energy Corp. (the “Company”) for the period ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I Ryan L. Smith, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

 

 

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   

 
 

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company, at the dates and for the periods indicated.

 

Date: May 9, 2024

 

 

By:  

/s/ Ryan L. Smith
   

Ryan L. Smith
   

Chief Executive Officer

(Principal Executive Officer)

 

 

Exhibit 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report on Form 10-Q of U.S. Energy Corp. (the “Company”) for the period ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I Mark L. Zajac, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

 

 

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   

 
 

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company, at the dates and for the periods indicated.

 

Date: May 9, 2024

 

 

By:  

/s/ Mark L. Zajac
   

Mark L. Zajac
   

Chief Financial Officer

(Principal Financial and Accounting Officer)

 

 
v3.24.1.u1
Document And Entity Information - shares
 3 Months Ended
Mar. 31, 2024
May 06, 2024
Document Information [Line Items]    
Entity Central Index Key 0000101594  
Entity Registrant Name US ENERGY CORP  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2024  
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Mar. 31, 2024  
Document Transition Report false  
Entity File Number 000-06814  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 83-0205516  
Entity Address, Address Line One 1616 S. Voss Road, Suite 725  
Entity Address, City or Town Houston  
Entity Address, State or Province TX  
Entity Address, Postal Zip Code 77057  
City Area Code 346  
Local Phone Number 509-8734  
Title of 12(b) Security Common stock, par value $0.01  
Trading Symbol USEG  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   25,287,213
v3.24.1.u1
Unaudited Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
Mar. 31, 2024
Dec. 31, 2023
Current assets:    
Cash and equivalents $ 2,006 $ 3,351
Oil and natural gas sales receivables 2,088 2,336
Marketable equity securities 179 164
Commodity derivative asset -current 59 1,844
Other current assets 929 527
Real estate assets held for sale, net of selling costs 139 150
Total current assets 5,400 8,372
Oil and natural gas properties under full cost method:    
Unevaluated properties 0 0
Evaluated properties 171,339 176,679
Less accumulated depreciation, depletion and amortization (108,250) (106,504)
Net oil and natural gas properties 63,089 70,175
Other Assets:    
Property and equipment, net 842 899
Right-of-use asset 653 693
Other assets 286 305
Total assets 70,270 80,444
Current liabilities:    
Accounts payable and accrued liabilities 3,695 4,064
Accrued compensation and benefits 404 702
Revenue and royalties payable 4,937 4,857
Asset retirement obligations - current 1,273 1,273
Current lease obligation 186 182
Total current liabilities 10,495 11,078
Noncurrent liabilities:    
Credit facility 5,000 5,000
Asset retirement obligations - noncurrent 17,452 17,217
Long-term lease obligation, net of current portion 564 611
Deferred tax liability 16 16
Total liabilities 33,527 33,922
Commitments and contingencies (Note 8)
Shareholders’ equity:    
Common stock, $0.01 par value; 245,000,000 shares authorized; 25,343,013 and 25,333,870 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively 253 253
Additional paid-in capital 218,161 218,403
Accumulated deficit (181,671) (172,134)
Total shareholders’ equity 36,743 46,522
Total liabilities and shareholders’ equity $ 70,270 $ 80,444
v3.24.1.u1
Unaudited Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares
Mar. 31, 2024
Dec. 31, 2023
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, authorized (in shares) 245,000,000 245,000,000
Common stock, issued (in shares) 25,343,013 25,333,870
Common stock, outstanding (in shares) 25,343,013 25,333,870
v3.24.1.u1
Unaudited Condensed Consolidated Statements of Operations - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Revenue:    
Total revenue $ 5,391 $ 8,272
Operating expenses:    
Lease operating expenses 3,186 4,409
Gathering, transportation and treating 64 114
Production taxes 343 520
Depreciation, depletion, accretion and amortization 2,195 2,417
Impairment of oil and natural gas properties 5,419 0
General and administrative expenses 2,206 2,772
Total operating expenses 13,413 10,232
Operating income (loss) (8,022) (1,960)
Other income (expense):    
Commodity derivative gain (loss), net (1,381) 919
Interest (expense), net (120) (268)
Other income (expense), net 4 0
Total other income (expense) (1,497) 651
Net income (loss) before income taxes (9,519) (1,309)
Income tax (expense) benefit (18) 62
Net income (loss) $ (9,537) $ (1,247)
Basic and diluted weighted average shares outstanding (in shares) 25,388,221 25,178,565
Basic and diluted income (loss) per share (in dollars per share) $ (0.38) $ (0.05)
Oil Sales[Member]    
Revenue:    
Total revenue $ 4,727 $ 7,095
Natural Gas, Midstream [Member]    
Revenue:    
Total revenue $ 664 $ 1,177
v3.24.1.u1
Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity - USD ($)
$ in Thousands
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Total
Balances (in shares) at Dec. 31, 2022 25,023,812      
Balances at Dec. 31, 2022 $ 250 $ 216,690 $ (138,586) $ 78,354
Stock-based compensation $ 0 727 0 727
Shares issued upon vesting of restricted stock awards (in shares) 273,000      
Shares issued upon vesting of restricted stock awards $ 3 (3) 0 0
Shares withheld to settle tax withholding obligations for restricted stock awards (in shares) (62,140)      
Shares withheld to settle tax withholding obligations for restricted stock awards $ (1) (149) 0 (150)
Cash dividends 0 0 (596) (596)
Net income (loss) $ 0 0 (1,247) $ (1,247)
Share repurchases (in shares)       0
Balances (in shares) at Mar. 31, 2023 25,234,672      
Balances at Mar. 31, 2023 $ 252 217,265 (140,429) $ 77,088
Balances (in shares) at Dec. 31, 2023 25,333,870      
Balances at Dec. 31, 2023 $ 253 218,403 (172,134) 46,522
Stock-based compensation $ 0 200 0 200
Shares issued upon vesting of restricted stock awards (in shares) 426,104      
Shares issued upon vesting of restricted stock awards $ 4 (4) 0 0
Shares withheld to settle tax withholding obligations for restricted stock awards (in shares) (98,761)      
Shares withheld to settle tax withholding obligations for restricted stock awards $ (1) (104) 0 (105)
Net income (loss) $ 0 0 (9,537) $ (9,537)
Share repurchases (in shares) (318,200)     (318,200)
Share repurchases $ (3) (334) 0 $ (337)
Balances (in shares) at Mar. 31, 2024 25,343,013      
Balances at Mar. 31, 2024 $ 253 $ 218,161 $ (181,671) $ 36,743
v3.24.1.u1
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Cash flows from operating activities:    
Net income (loss) $ (9,537) $ (1,247)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:    
Depreciation, depletion, accretion, and amortization 2,195 2,417
Impairment of oil and natural gas properties 5,419 0
Deferred income taxes 0 (62)
Total commodity derivatives (gains) losses, net 1,381 (919)
Commodity derivative settlements received (paid) 404 (406)
(Gains) losses on marketable equity securities (15) 0
Impairment and loss on real estate held for sale 11 0
Amortization of debt issuance costs 12 12
Stock-based compensation 200 727
Right of use asset amortization 40 55
Oil and natural gas sales receivable 248 1,145
Other assets (397) 52
Accounts payable and accrued liabilities (245) (794)
Accrued compensation and benefits (298) (754)
Revenue and royalties payable 80 79
Payments on operating lease liability (43) (58)
Payments of asset retirement obligations (58) (11)
Net cash provided by (used in) operating activities (603) 236
Cash flows from investing activities:    
Oil and natural gas capital expenditures (144) (1,106)
Property and equipment expenditures 0 (261)
Proceeds from sale of oil and natural gas properties, net (35) 0
Net cash provided by (used in) investing activities (179) (1,367)
Cash flows from financing activities:    
Payments on insurance premium finance note (62) (112)
Shares withheld to settle tax withholding obligations for restricted stock awards 105 151
Dividends paid 0 (596)
Repurchases of common stock (396) 0
Net cash provided by (used in) financing activities (563) (859)
Net (decrease) increase in cash and equivalents (1,345) (1,990)
Cash and equivalents, beginning of period 3,351 4,411
Cash and equivalents, end of period $ 2,006 $ 2,421
v3.24.1.u1
Note 1 - Organization, Operations and Significant Accounting Policies
 3 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]

1. ORGANIZATION, OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

 

Organization and Operations

 

U.S. Energy Corp. (collectively with its wholly-owned subsidiaries, Energy One LLC (“Energy One”) and New Horizon Resources LLC (“New Horizon Resources”), referred to as the “Company” in these notes to unaudited Condensed Consolidated Financial Statements) is incorporated in the State of Delaware. The Company’s principal business activities are focused on the acquisition, exploration, and development of onshore oil and natural gas properties in the United States, which the Company considers a single operating segment. Our principal properties and operations are in the Rockies region (Montana, Wyoming and North Dakota), the Mid-Continent (Oklahoma, Kansas and North and East Texas) region, and the West Texas, South Texas, and Gulf Coast region.

 

Basis of Presentation

 

The accompanying unaudited Condensed Consolidated Financial Statements are presented in accordance with U.S. generally accepted accounting principles (“GAAP”) and have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, certain information and footnote disclosures required by GAAP for complete financial statements have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the Condensed Consolidated Financial Statements have been included.

 

For further information, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 26, 2024. Our financial condition as of March 31, 2024, and operating results for the three months ended March 31, 2024, are not necessarily indicative of the financial condition and results of operations that may be expected for any future interim period or for the year ending December 31, 2024.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the fair value of oil and gas properties acquired, oil and natural gas reserves that are used in the calculation of depreciation, depletion, amortization, and impairment of the carrying value of evaluated oil and natural gas properties; production and commodity price estimates used to record accrued oil and natural gas sales receivables; future prices of commodities used in the valuation of commodity derivative contracts; and the cost and timing of future asset retirement obligations. The Company evaluates its estimates on an on-going basis and bases its estimates on historical experience and on various other assumptions the Company believes to be reasonable. Due to inherent uncertainties, including the future prices of oil and natural gas, these estimates could change in the near term and such changes could be material.

 

Principles of Consolidation

 

The accompanying Condensed Consolidated Financial Statements have been prepared in conformity with GAAP and include the accounts of U.S. Energy Corp. and its wholly-owned subsidiaries Energy One and New Horizon Resources. U.S. Energy Corp. accounts for its share of oil and gas exploration and production activities, in which it has a direct working interest, by reporting its proportionate share of assets, liabilities, revenues, costs, and cash flows within the relevant lines on the balance sheets, statements of operations, and statements of cash flows. All inter-company balances and transactions have been eliminated in consolidation.

 

Reclassifications

 

Certain prior year amounts are reclassified to conform to the current year presentation.

 

Historically, the Company included gathering, transportation, and treating costs within lease operating expense on the Condensed Consolidated Statements of Operations. Effective July 1, 2023, the Company began classifying gathering, treating, and transportation costs in a separate line item, titled Gathering, transportation, and treating, on the Condensed Consolidated Statements of Operations and recast prior period results for this reclassification. This reclassification had no impact on the Company's net income, earnings per share, cash flows, or financial position. The Company revised historical periods to reflect this change in presentation.

 

The Company has historically included revenue and royalties payable within accounts payables and accrued liabilities on the Condensed Consolidated Balance Sheets. Effective December 31, 2023, the Company began classifying revenue and royalties payable as a separate line item on the Condensed Consolidated Balance Sheet.  The Condensed Consolidated Statements of Cash Flows has been updated to separate changes in operating assets and liabilities from revenue and royalties payable and accounts payable and accrued liabilities. This reclassification had no impact on the Company's net income (loss), income (loss) per share, cash flows, or financial position. The Company revised historical periods to reflect this change in presentation.

 
v3.24.1.u1
Note 2 - Acquisitions and Divestitures
 3 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Mergers, Acquisitions and Dispositions Disclosures [Text Block]

2. ACQUISITIONS AND DIVESTITURES

 

Divestitures

 

During the year ended December 31, 2023, the Company closed on a series of individual divestitures for a total of $7.0 million in net proceeds before transaction costs of $0.4 million.  The divestitures included the Company’s non-operated interests in 152 wells across North Dakota, New Mexico, and Texas, and overriding royalty interests in seven wells in Karnes County, Texas.  These divestitures did not have a significant impact to reserves volumes or the full cost pool depletion rate.  As such, the Company recorded the proceeds, net of transaction costs and purchase price adjustments, to the full cost pool, with no gain or loss recognized.  Relief of associated asset retirement obligations of $0.5 million were also recorded to the full cost pool.

 
v3.24.1.u1
Note 3 - Revenue From Contracts With Customers
 3 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Revenue from Contract with Customer [Text Block]

3. REVENUE RECOGNITION

 

The Company disaggregates revenues from its share of revenue from the sale of oil and natural gas and liquids by region. The Company’s revenues in the Rockies region, West Texas, South Texas, and Gulf Coast region, and Mid-Continent region for the three months ended March 31, 2024 and 2023, are presented in the following table:

 

  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Revenue:

        

Rockies

        

Oil

 $1,721  $2,338 

Natural gas and liquids

  41   88 

Total

 $1,762  $2,426 
         

West Texas, South Texas, and Gulf Coast

        

Oil

 $1,599  $2,955 

Natural gas and liquids

  46   209 

Total

 $1,645  $3,164 
         

Mid-Continent

        

Oil

 $1,407  $1,802 

Natural gas and liquids

  577   880 

Total

 $1,984  $2,682 
         

Combined Total

 $5,391  $8,272 

 

 

Significant concentrations of credit risk

 

The Company has exposure to credit risk in the event of non-payment of oil and natural gas receivables by purchasers of its operated oil and natural gas properties. The following table presents the purchasers that accounted for 10% or more of the Company’s total oil and natural gas revenue for at least one of the periods presented:

 

  

Three Months Ended

 
  

March 31,

 
  

2024

  

2023

 

Purchaser A

  28%  11%

Purchaser B

  23%  18%

Purchaser C

  11%  0%

Purchaser D

  0%  15%

Purchaser E

  0%  13%

 
v3.24.1.u1
Note 4 - Leases
 3 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Lessee, Operating Leases [Text Block]

4. LEASES

 

The Company’s operating lease right-of-use asset and lease liability are recognized at their discounted present value under the following captions in the Condensed Consolidated Balance Sheets on  March 31, 2024 and December 31, 2023:

 

  

March 31, 2024

  

December 31, 2023

 
  

(in thousands)

 

Right-of-use asset

 $653  $693 

Lease liability

        

Current lease obligation

 $186  $182 

Long-term lease obligation

  564   611 
  $750  $793 

 

The Company recognizes lease expense on a straight-line basis excluding short-term and variable lease payments, which are recognized as incurred. Short-term lease cost represents payments for oilfield equipment with original lease terms less than one year. Following are the amounts recognized as components of lease cost for the three months ended March 31, 2024 and 2023:

 

  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Operating lease cost

 $49  $65 

Short-term lease cost

  212   269 

Total lease costs

 $261  $334 

 

The Company’s Houston office operating lease does not contain implicit interest rates that can be readily determined; therefore, the Company used the incremental borrowing rates in effect at the time the Company entered into the leases.

 

  

As of March 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Weighted average lease term (years)

  3.7   4.7 

Weighted average discount rate

  4.25%  4.25%

 

 

Maturity of operating lease liabilities with terms of one year or more as of March 31, 2024 are presented in the following table:

 

  

March 31, 2024

 
  

(in thousands)

 

2024

 $160 

2025

  218 

2026

  224 

2027

  210 

Total lease payments

 $812 

Less: imputed interest

  (62)

Total lease liability

 $750 

 
v3.24.1.u1
Note 5 - Oil and Natural Gas Production Activities
 3 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Oil and Gas, Property and Equipment [Text Block]

5. OIL AND NATURAL GAS PRODUCING ACTIVITIES

 

Full Cost Method Ceiling Test and Impairment

 

The reserves used in the ceiling test incorporate assumptions regarding pricing and discount rates over which management has no influence in the determination of present value. In the calculation of the ceiling test as of March 31, 2024, the Company used $77.48 per barrel for oil and $2.45 per one million British Thermal Units (MMbtu) for natural gas (as further adjusted for property, specific gravity, quality, local markets and distance from markets) to compute the future cash flows of the Company’s producing properties. The discount factor used was 10%.

 

The Company recorded a $5.4 million ceiling test write-down of its oil and gas properties during the three months ended March 31, 2024, due to a reduction in the value of proved oil and natural gas reserves primarily as a result of a decrease in crude oil and natural gas prices, as well as reserves revisions related to wells shut-in during the first quarter of 2024 and updates to the decline curves for certain wells.

 
v3.24.1.u1
Note 6 - Debt
 3 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Debt Disclosure [Text Block]

6. DEBT

 

On January 5, 2022, the Company entered into a four-year credit agreement (“Credit Agreement”) with FirstBank Southwest (“FirstBank”) as administrative agent for one or more lenders (the “Lenders”), which provided for a revolving line of credit with an initial borrowing base of $15 million, and a maximum credit amount of $100 million. Borrowings under the Credit Agreement are collateralized by a first priority, perfected lien and security interests on substantially all assets of the Company (subject to permitted liens and other customary exceptions). On July 26, 2022, the Company, in anticipation of the closing of the ETXENERGY East Texas acquisition entered into a letter agreement with FirstBank whereby it increased the borrowing base under the Credit Agreement from $15 million to $20 million.

 

Under the Credit Agreement, revolving loans may be borrowed, repaid and re-borrowed until January 5, 2026, when all outstanding amounts must be repaid. Interest on the outstanding amounts under the Credit Agreement will accrue at an interest rate equal to the greater of (i) the prime rate in effect on such day, and (ii) the Federal Funds rate in effect on such day (as determined in the Credit Agreement) plus 0.50%, and an applicable margin that ranges between 0.25% to 1.25% depending on utilization of the amount of the borrowing base (the “Applicable Margin”). Interest expense recognized on the Credit Agreement and the weighted average interest rates for the three months ended March 31, 2024 and 2023 are presented in the following table:

 

  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Interest expense

 $111  $249 

Weighted average interest rate

  9.1%  8.5%

 

The Credit Agreement contains various restrictive covenants and compliance requirements, which include: (i) maintenance of certain financial ratios, as defined in the Credit Agreement tested quarterly, that limit the Company’s ratio of total debt to EBITDAX (as defined in the Credit Agreement) to 3:1 and require its ratio of consolidated current assets to consolidated current liabilities (as each is described in the Credit Agreement) to remain at 1:1 or higher; (ii) restrictions on making restricted payments as defined in the Credit Agreement, including the payment of cash dividends and repurchases of equity interests (subject to certain limited rights to make restricted payments as long as no event of default has occurred, or would result from the restricted payment, certain financial ratios are met and the borrowing availability after giving pro forma effect to any borrowing to be made on the date of the restricted payment is greater than, or equal to, 20% of the then existing borrowing base); (iii) limits on the incurrence of additional indebtedness; (iv) a prohibition on the entry into commodity swap contracts exceeding a specified percentage of our expected production; and (v) restrictions on the disposition of assets. As of March 31, 2024, the borrowing base was $20 million, and the Company was in compliance with all financial covenants related to the Credit Agreement.

 

The amount outstanding on the Credit Agreement as of March 31, 2024 and December 31, 2023, was $5.0 million.

 
v3.24.1.u1
Note 7 - Commodity Derivatices
 3 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Derivatives and Fair Value [Text Block]

7. COMMODITY DERIVATIVES

 

The Company’s results of operations and cash flows are affected by changes in market prices for crude oil and natural gas. To manage a portion of its exposure to price volatility from producing crude oil and natural gas, the Company may enter into commodity derivative contracts to protect against price declines in future periods. The Company does not enter into derivative contracts for speculative purposes. The Company does not apply hedge accounting. Accordingly, changes in the fair value of the derivative contracts are recorded in the Condensed Consolidated Statements of Operations and are included as a non-cash adjustment to net income in the operating activities section in the Condensed Consolidated Statements of Cash Flows.

 

As of March 31, 2024, the Company had commodity derivative contracts outstanding as summarized in the tables below:

 

  

Fixed Price Swaps

 
  

Quantity

  

Weighted

 
  

Crude oil

  

Average

 

Commodity/ Index/ Maturity Period

 

(Bbls)(1)

  

Price

 
         

NYMEX WTI

        

Crude Oil 2024 Contracts:

        

Second quarter 2024

  48,600  $81.76 

Third quarter 2024

  45,000  $79.80 

Fourth quarter 2024

  40,720  $78.15 

Total 2024

  134,320  $80.01 

 

(1)

“Bbl” refers to one stock tank barrel, or 42 U.S. gallons liquid volume, used in this report in reference to crude oil or other liquid hydrocarbons.

 

The following table details the fair value of commodity derivative contracts recorded in the accompanying Condensed Consolidated Balance Sheets by category:

 

  

March 31, 2024

  

December 31, 2023

 
  

(in thousands)

 

Derivative assets:

        

Current assets

 $59  $1,844 

Total derivative assets

 $59  $1,844 
         

 

As of March 31, 2024, all commodity derivative contracts held by the Company were subject to a master netting arrangement with its counterparty. The terms of the Company’s derivative agreements provide for offsetting of amounts payable or receivable between it and the counterparty for contracts that settle on the same date. The Company’s agreements also provide that in the event of an early termination, the counterparty has the right to offset amounts owed or owing under that and any other agreement. The Company’s accounting policy is to offset positions when we have a right of offset or master netting arrangement. See Note 13-Fair Value Measurements for disclosure of the fair value of derivative assets and liabilities on a gross and net basis.

 

The following table summarizes the components of the commodity derivative settlement gain (loss) as well as the components of the net commodity derivative (gain) loss line-item presentation in the accompanying Condensed Consolidated Statements of Operations:

 

  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Commodity derivative settlement gain (loss):

        

Oil contracts

 $404  $(378)

Gas contracts

  -   (28)

Total commodity derivative settlement gain (loss)

 $404  $(406)
         

Total net commodity derivative gain (loss):

        

Oil contracts

 $(1,381) $859 

Gas contracts

  -   60 

Total net commodity derivative gain (loss)

 $(1,381) $919 

  
v3.24.1.u1
Note 8 - Commitments, Contingencies, and Related Party Transactions
 3 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]

8. COMMITMENTS AND CONTINGENCIES

 

Contingencies

 

The Company is subject to litigation and claims arising in the ordinary course of business. The Company accrues for such items when a liability is both probable and the amount can be reasonably estimated. In the opinion of management, the anticipated results of any pending litigation and claims are not expected to have a material effect on the results of operations, the financial position, or the cash flows of the Company.

 
v3.24.1.u1
Note 9 - Shareholders' Equity
 3 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Equity [Text Block]

9. SHAREHOLDERS’ EQUITY

 

At March 31, 2024, the Company had 25,343,013 shares of common stock outstanding and 245,000,000 authorized. In addition, as of March 31, 2024, the Company had 5,000,000 authorized but unissued shares of preferred stock.

 

Stock Option Plans

 

From time to time, the Company may grant stock options under its incentive plan covering shares of common stock to employees of the Company. Stock options, when exercised, are settled through the payment of the exercise price in exchange for new shares of stock underlying the option. These awards typically expire ten years from the grant date.

 

For the three months ended March 31, 2024 and 2023, there was no compensation expense related to stock options. As of March 31, 2023, all stock options had vested. No stock options were granted, exercised, or expired during the three months ended March 31, 2024 and 2023.  The stock options had de minimis intrinsic values for the periods reported. Presented below is information for stock options outstanding and exercisable as of March 31, 2024, and December 31, 2023:

 

  

March 31, 2024

  

December 31, 2023

 
      Weighted      Weighted 
      Average      Average 
  Number of  Exercise  Number of  Exercise 
  

Shares

  

Price

  

Shares

  

Price

 
                 

Stock options outstanding and exercisable

  23,176  $38.92   23,176  $38.92 

 

The following table summarizes information for stock options outstanding and for stock options exercisable at March 31, 2024 by the remaining contractual term:

 

Options Outstanding

  

Options Exercisable

 
   

Exercise

  

Weighted

  

Remaining

      

Weighted

 
   

Price

  

Average

  

Contractual

      

Average

 

Number of

  

Range

  

Exercise

  

Term

  

Number of

  

Exercise

 

Shares

  

Low

  

High

  

Price

  

(years)

  

Shares

  

Price

 
                          
16,500  $7.20  $11.60  $10.00   3.5   16,500  $10.00 
5,676   90.00   90.00   90.00   0.8   5,676   90.00 
1,000   226.20   226.20   226.20   0.4   1,000   226.20 
                          
23,176  $7.20  $226.20  $38.92   2.7   23,176  $38.92 

 

Restricted Stock

 

The Company grants restricted stock under its incentive plan covering shares of common stock to employees and directors of the Company.  Significantly all of the restricted stock awards are time-based awards and are amortized ratably over a requisite service period. Time-based awards vest ratably following the grant date, provided the grantee is employed on the vesting date.  The Company has one restricted stock award that vests if the Company's share price is equal to or greater than $2.00 for 20 consecutive trading days within the period beginning March 19, 2025 and ending March 18, 2027.  The grant date fair value of this award is amortized over a derived requisite service period from the fair value model.  Forfeitures of restricted stock awards are recognized as they occur.  Restricted stock granted to employees, when vested, may be settled through the net issuance of shares, reduced by the number of shares required to pay withholding taxes. Non-vested shares of restricted stock are not included in common shares outstanding until vesting has occurred.

 

The following table presents the changes in non-vested restricted stock awards to all employees and directors for the three months ended March 31, 2024:

 

      

Weighted-Avg.

 
      

Grant Date

 
      

Fair Value

 
  

Shares

  

Per Share

 
         

Non-vested restricted stock as of December 31, 2023

  855,236  $2.63 

Granted

  1,299,000  $0.96 

Vested

  (411,041) $2.78 

Forfeited

  (5,500) $2.30 

Non-vested restricted stock as of March 31, 2024

  1,737,695  $1.35 

 

For the three months ended March 31, 2024 and 2023, the Company recognized $0.2 million and $0.7 million, respectively, of stock compensation expense related to restricted stock grants.  Total compensation cost related to non-vested awards not yet recognized in the Company’s Condensed Consolidated Statements of Operations as of March 31, 2024 was $1.6 million. This cost is expected to be recognized over a weighted average period of 1.6 years.

 

Dividends

 

On February 23, 2023, the Company paid a quarterly cash dividend of $0.0225 per share of common stock outstanding to stockholders of record at the close of business on February 10, 2023.  The total amount of dividends paid for the three months ended March 31, 2023 was $0.6 million. On August 9, 2023, the Board of Directors suspended the Company’s dividend payment program.  As a result, no dividends were paid for the three months ended March 31, 2024.

 

Share Repurchase Program

 

On April 26, 2023, the Board of Directors of the Company authorized and approved a share repurchase program for up to $5.0 million of the outstanding shares of the Company’s common stock.  On March 19, 2024, the Board of Directors authorized and approved an extension of the ongoing share repurchase program.  Subject to any future extensions, the repurchase program is scheduled to expire on the earlier of  June 30, 2025, when a maximum of $5.0 million of the Company’s common stock has been repurchased, or when the program is discontinued by the Board of Directors.

 

Under the stock repurchase program, shares are repurchased from time to time in the open market or through negotiated transactions at prevailing market prices, or by other means in accordance with federal securities laws. Repurchases are 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 stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance. The repurchase program is funded using the Company’s working capital. The repurchased shares are cancelled and therefore will not be held in treasury or reissued.

 

During the three months ended March 31, 2024, the Company repurchased 318,200 shares for $337 thousand, at a weighted average price of $1.06 per share.  There were no share repurchases during the three months ended March 31, 2023.

 
v3.24.1.u1
Note 10 - Asset Retirement Obligations
 3 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Asset Retirement Obligation Disclosure [Text Block]

10. ASSET RETIREMENT OBLIGATIONS

 

The Company has asset retirement obligations (“ARO”) associated with the future plugging and abandonment of proved properties. Initially, the fair value of a liability for an ARO is recorded in the period in which the ARO is incurred with a corresponding increase in the carrying amount of the related asset. The liability is accreted to its present value each period and the capitalized cost is depleted over the life of the related asset. If the liability is settled for an amount other than the recorded amount, an adjustment to the full cost pool is recognized. The Company had no assets that are restricted for the purpose of settling ARO.

 

In the fair value calculation for the ARO there are numerous assumptions and judgments, including the ultimate retirement cost, inflation factors, credit-adjusted risk-free discount rates, timing of retirement and changes in legal, regulatory, environmental, and political environments. To the extent future revisions to assumptions and judgments impact the present value of the existing ARO, a corresponding adjustment is made to the oil and natural gas property balance.

 

The following is a reconciliation of the changes in the Company’s liabilities for asset retirement obligations as of March 31, 2024 and December 31, 2023:

 

  

March 31, 2024

  

December 31, 2023

 
  

(in thousands)

 

Balance, beginning of year

 $18,490  $15,442 

Acquired or incurred

  -   11 

Cost and life revisions

  (100)  2,494 

Plugged

  (58)  (215)

Sold

  -   (458)

Accretion

  393   1,216 

Balance, end of period

 $18,725  $18,490 
         

Asset retirement obligations - current

 $1,273  $1,273 

Asset retirement obligations - noncurrent

  17,452   17,217 

Balance, end of period

 $18,725  $18,490 

 
v3.24.1.u1
Note 11 - Income Taxes
 3 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

11. INCOME TAXES

 

The Company’s tax provision or benefit from income taxes for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any. Each quarter the Company updates its estimate of the annual effective tax rate and makes a year-to-date adjustment to the provision. The Company’s effective tax rate was approximately 0% and 5% for the three months ended March 31, 2024 and 2023, respectively. The primary difference in the Company’s effective tax rate and the statutory rate for both periods is related to the movement in the valuation allowance against the Company’s net deferred tax assets.

 

Deferred taxes are recognized for the expected future tax consequences of temporary differences between the financial statement and tax basis of assets, liabilities, net operating losses and tax credit carry-forwards. We review our deferred tax assets (“DTAs”) and valuation allowance on a quarterly basis. As part of our review, we consider positive and negative evidence, including cumulative results in recent years. The Company has limitations on net operating losses (“NOLs”) generated prior to 2022 and other tax attributes as a result of an Internal Revenue Code ("IRC") Section 382 ownership change from a January 5, 2022 acquisition. As such, the Company is projecting that as of March 31, 2024, it will not have sufficient DTAs available to fully offset the expected future taxable income that will be generated by the realization of the Company’s deferred tax liabilities and thus has recorded a net deferred tax liability.

 

The Company recognizes, measures, and discloses uncertain tax positions whereby tax positions must meet a “more-likely-than-not” threshold to be recognized. During the three months ended March 31, 2024 and 2023, no adjustments were recognized for uncertain tax positions.

 
v3.24.1.u1
Note 12 - Income (Loss) Per Share
 3 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Earnings Per Share [Text Block]

12. INCOME (LOSS) PER SHARE

 

Basic net income (loss) per common share is calculated by dividing net income (loss) attributable to common shareholders by the weighted-average number of common shares outstanding for the respective period. Diluted net income per common share is calculated by dividing adjusted net income by the diluted weighted average number of common shares outstanding, which includes the effect of potentially dilutive securities. Potentially dilutive securities for this calculation consist of stock options and unvested shares of restricted common stock, which are measured using the treasury stock method. When the Company recognizes a net loss, all potentially dilutive shares are anti-dilutive and are consequently excluded from the calculation of dilutive net loss per common share. Unvested shares of restricted stock participate in dividend distributions; however, they do not participate in losses.  Therefore, dividends attributable to participating securities are not included as a reduction in the calculation of loss attributable to common shareholders.

 

The following table sets forth the calculation of basic and diluted net income (loss) per share for the three months ended March 31, 2024 and 2023:

 

  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

(in thousands except per share data)

 

Net income (loss) attributable to common shareholders

 $(9,537) $(1,247)
         

Basic weighted average common shares outstanding

  25,388   25,179 

Dilutive effect of potentially dilutive securities

  -   - 

Diluted weighted average common shares outstanding

  25,388   25,179 
         

Basic net income (loss) per share

 $(0.38) $(0.05)

Diluted net income (loss) per share

 $(0.38) $(0.05)

 

For the three months ended March 31, 2024 and 2023, potentially dilutive securities excluded from the calculation of weighted average shares because they were anti-dilutive were as follows:

 

  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Stock options

  23   28 

Unvested shares of restricted stock

  1,738   1,210 

Total

  1,761   1,238 

 
v3.24.1.u1
Note 13 - Fair Value Measurements
 3 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

13. FAIR VALUE MEASUREMENTS

 

The Company’s fair value measurements are estimated pursuant to a fair value hierarchy that requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date, giving highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3). In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. The lowest level input that is significant to a fair value measurement in its entirety determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability, and may affect the valuation of the assets and liabilities and their placement within the hierarchy level. The three levels of inputs that may be used to measure fair value are defined as:

 

Level 1 - Quoted prices for identical assets and liabilities traded in active markets.

 

Level 2 - Observable inputs other than Level 1 that are directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in active markets, or other observable inputs that can be corroborated by observable market data.

 

Level 3 - Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

 

While the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The following is a description of the valuation methodologies used for complex financial instruments measured at fair value:

 

Recurring Fair Value Measurements

 

Commodity Derivative Instruments

 

The Company measures the fair value of commodity derivative contracts using an income valuation technique based on the contract price of the underlying positions, crude oil and natural gas forward curves, discount rates, and Company or counterparty non-performance risk. The fixed-price swaps and collar derivative contracts are included in Level 2. The fair value of commodity derivative contracts and their presentation in our unaudited Condensed Consolidated Balance Sheet as of March 31, 2024 and December 31, 2023 are presented below:

 

As of March 31, 2024

                      

Net Fair Value

 
  

Quoted Prices

                  

Presented in the

 
  

in Active Markets

  

Significant Other

  

Significant

          

Unaudited

 
  

for Identical

  

Observable

  

Unobservable

          

Condensed

 
  

Assets

  

Inputs

  

Inputs

  

Total Gross

  

Effect of

  

Consolidated

 
  

(Level 1)

  

(Level 2)

  

(Level 3)

  

Fair Value

  

Netting

  

Balance Sheet

 

(in thousands)

 

Assets

                        

Current:

                        

Commodity derivatives

 $-  $101  $-  $101  $(42) $59 
                         

Liabilities

                        

Current:

                        

Commodity derivatives

 $-  $(42) $-  $(42) $42  $- 
                         

Net commodity derivative instruments

 $-  $59  $-  $59  $-  $59 

 

As of December 31, 2023

                      

Net Fair Value

 
  

Quoted Prices

                  

Presented in the

 
  

in Active Markets

  

Significant Other

  

Significant

          

Unaudited

 
  

for Identical

  

Observable

  

Unobservable

          

Condensed

 
  

Assets

  

Inputs

  

Inputs

  

Total Gross

  

Effect of

  

Consolidated

 
  

(Level 1)

  

(Level 2)

  

(Level 3)

  

Fair Value

  

Netting

  

Balance Sheet

 

(in thousands)

 

Assets

                        

Current:

                        

Commodity derivatives

 $-  $1,844  $-  $1,844  $-  $1,844 
                         

Net commodity derivative instruments

 $-  $1,844  $-  $1,844  $-  $1,844 

 

Marketable Equity Securities

 

We measure the fair value of marketable equity securities based on quoted market prices obtained from independent pricing services. The Company has an investment in the marketable equity securities of Anfield Energy (“Anfield”), which it acquired as consideration for sales of certain mining operations. Anfield is traded in an active market under the trading symbol AEC:TSXV and has been classified as Level 1.

 

  

March 31, 2024

  

December 31, 2023

 

Current assets:

        

Marketable equity securities

        

Number of shares owned

  2,421,180   2,421,180 

Quoted market price

 $0.07382  $0.06789 
         

Fair value of marketable equity securities

 $178,732  $164,375 

 

Credit Facility

 

The Company’s credit facility approximates fair value because the interest rate is variable and reflective of market rates.

 

Other Financial Instruments

 

The carrying value of financial instruments included in current assets and current liabilities approximate fair value due to the short-term nature of those instruments.

 

Nonrecurring Fair Value Measurements

 

Asset Retirement Obligations

 

The Company measures the fair value of asset retirement obligations as of the date a well is acquired, the date a well begins drilling, or the date the Company revises its ARO assumptions. The Company’s estimated asset retirement obligations are based on historical experience in plugging and abandoning wells, estimated economic lives, estimated plugging and abandonment costs and federal and state regulatory requirements, all unobservable inputs, and therefore, are designated as Level 3 within the valuation hierarchy. The liability is discounted using the credit-adjusted risk-free rate estimated at the time the liability is incurred or revised upwards. The credit adjusted risk-free rate used to discount the Company’s plugging and abandonment liabilities range from 7.30% to 19.00%. See Note 10-Asset Retirement Obligations.

 

Other Assets and Liabilities

 

The Company evaluates the fair value on a non-recurring basis of its Riverton, Wyoming real estate assets when circumstances indicate that the value has been impaired. As of  March 31, 2024, the Company estimated the fair value of its real estate assets based on a market approach, using the value from a binding offer on the real estate assets accepted on February 27, 2024.  The sale closed on April 5, 2024.

 
v3.24.1.u1
Note 14 - Other Current Assets and Accounts Payable and Accrued Liabilities
 3 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Other Current Assets, Accounts Payable, and Accrued Liabilities [Text Block]

14. OTHER CURRENT ASSETS AND ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

 

Other Current Assets

 

The following table presents the components of other current assets as of the dates indicated:

 

  

March 31, 2024

  

December 31, 2023

 
  

(in thousands)

 

Prepaid expenses

 $598  $88 

Joint interest billings receivable

  248   265 

Income tax receivable

  45   135 

Other

  38   39 
         

Total other current assets

 $929  $527 

 

Accounts Payable and Accrued Liabilities.

 

The following table presents the components of accounts payable and accrued liabilities as of the dates indicated:

 

  

March 31, 2024

  

December 31, 2023

 
  

(in thousands)

 

Accounts payable

 $2,138  $1,944 

Operating expense and oil and gas property accruals

  832   1,335 

Interest Payable

  112   247 

Production taxes payable

  595   454 

Insurance premium financing

  -   62 

Other

  18   22 
         

Total accounts payable and accrued expenses

 $3,695  $4,064 

 
v3.24.1.u1
Note 15 - Supplemental Disclosures of Cash Flow Information
 3 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Cash Flow, Supplemental Disclosures [Text Block]

15. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

 

  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Cash paid for interest

 $254  $268 

Cash received for income taxes

  (70)  - 
         

Investing activities:

        

Change in capital expenditure accruals

  -   18 

Asset retirement obligations

  (158)  43 

Financing activities:

        

Accrual for repurchase of common stock

  (59)   

Financing of insurance premiums with note payable

  -   654 

 
v3.24.1.u1
Note 16 - Subsequent Events
 3 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Subsequent Events [Text Block]

16. SUBSEQUENT EVENTS

 

Derivative Activities

 

On April 2, 2024, the Company entered into crude oil swap agreements, agreeing to pay monthly the average NYMEX WTI price for the month of settlement and receive a fixed price.  The contracts are for a total of 164,125 barrels of oil, extending from January 2025 to December 2025 with a weighted average fixed price of $73.71.

 
v3.24.1.u1
Insider Trading Arrangements
 3 Months Ended
Mar. 31, 2024
Insider Trading Arr Line Items  
Material Terms of Trading Arrangement [Text Block]

Item 5. Other Information.

 

Rule 10b5-1(c) Trading Plans. Our directors and executive officers may from time to time enter into plans or other arrangements for the purchase or sale of our shares that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or may represent a non-Rule 10b5-1 trading arrangement under the Exchange Act. During the quarter ended March 31, 2024, none of the Company’s directors or officers (as defined in Rule 16a-1(f)) adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

 
Rule 10b5-1 Arrangement Terminated [Flag] false
Rule 10b5-1 Arrangement Adopted [Flag] false
Non-Rule 10b5-1 Arrangement Terminated [Flag] false
Non-Rule 10b5-1 Arrangement Adopted [Flag] false
v3.24.1.u1
Significant Accounting Policies (Policies)
 3 Months Ended
Mar. 31, 2024
Accounting Policies [Abstract]  
Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

 

The accompanying unaudited Condensed Consolidated Financial Statements are presented in accordance with U.S. generally accepted accounting principles (“GAAP”) and have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, certain information and footnote disclosures required by GAAP for complete financial statements have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the Condensed Consolidated Financial Statements have been included.

 

For further information, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 26, 2024. Our financial condition as of March 31, 2024, and operating results for the three months ended March 31, 2024, are not necessarily indicative of the financial condition and results of operations that may be expected for any future interim period or for the year ending December 31, 2024.

 
Use of Estimates, Policy [Policy Text Block]

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the fair value of oil and gas properties acquired, oil and natural gas reserves that are used in the calculation of depreciation, depletion, amortization, and impairment of the carrying value of evaluated oil and natural gas properties; production and commodity price estimates used to record accrued oil and natural gas sales receivables; future prices of commodities used in the valuation of commodity derivative contracts; and the cost and timing of future asset retirement obligations. The Company evaluates its estimates on an on-going basis and bases its estimates on historical experience and on various other assumptions the Company believes to be reasonable. Due to inherent uncertainties, including the future prices of oil and natural gas, these estimates could change in the near term and such changes could be material.

 
Consolidation, Policy [Policy Text Block]

Principles of Consolidation

 

The accompanying Condensed Consolidated Financial Statements have been prepared in conformity with GAAP and include the accounts of U.S. Energy Corp. and its wholly-owned subsidiaries Energy One and New Horizon Resources. U.S. Energy Corp. accounts for its share of oil and gas exploration and production activities, in which it has a direct working interest, by reporting its proportionate share of assets, liabilities, revenues, costs, and cash flows within the relevant lines on the balance sheets, statements of operations, and statements of cash flows. All inter-company balances and transactions have been eliminated in consolidation.

 
Reclassification, Comparability Adjustment [Policy Text Block]

Reclassifications

 

Certain prior year amounts are reclassified to conform to the current year presentation.

 

Historically, the Company included gathering, transportation, and treating costs within lease operating expense on the Condensed Consolidated Statements of Operations. Effective July 1, 2023, the Company began classifying gathering, treating, and transportation costs in a separate line item, titled Gathering, transportation, and treating, on the Condensed Consolidated Statements of Operations and recast prior period results for this reclassification. This reclassification had no impact on the Company's net income, earnings per share, cash flows, or financial position. The Company revised historical periods to reflect this change in presentation.

 

The Company has historically included revenue and royalties payable within accounts payables and accrued liabilities on the Condensed Consolidated Balance Sheets. Effective December 31, 2023, the Company began classifying revenue and royalties payable as a separate line item on the Condensed Consolidated Balance Sheet.  The Condensed Consolidated Statements of Cash Flows has been updated to separate changes in operating assets and liabilities from revenue and royalties payable and accounts payable and accrued liabilities. This reclassification had no impact on the Company's net income (loss), income (loss) per share, cash flows, or financial position. The Company revised historical periods to reflect this change in presentation.

 
v3.24.1.u1
Note 3 - Revenue From Contracts With Customers (Tables)
 3 Months Ended
Mar. 31, 2024
Notes Tables  
Disaggregation of Revenue [Table Text Block]
  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Revenue:

        

Rockies

        

Oil

 $1,721  $2,338 

Natural gas and liquids

  41   88 

Total

 $1,762  $2,426 
         

West Texas, South Texas, and Gulf Coast

        

Oil

 $1,599  $2,955 

Natural gas and liquids

  46   209 

Total

 $1,645  $3,164 
         

Mid-Continent

        

Oil

 $1,407  $1,802 

Natural gas and liquids

  577   880 

Total

 $1,984  $2,682 
         

Combined Total

 $5,391  $8,272 
Schedules of Concentration of Risk, by Risk Factor [Table Text Block]
  

Three Months Ended

 
  

March 31,

 
  

2024

  

2023

 

Purchaser A

  28%  11%

Purchaser B

  23%  18%

Purchaser C

  11%  0%

Purchaser D

  0%  15%

Purchaser E

  0%  13%
v3.24.1.u1
Note 4 - Leases (Tables)
 3 Months Ended
Mar. 31, 2024
Notes Tables  
Lease, Cost [Table Text Block]
  

March 31, 2024

  

December 31, 2023

 
  

(in thousands)

 

Right-of-use asset

 $653  $693 

Lease liability

        

Current lease obligation

 $186  $182 

Long-term lease obligation

  564   611 
  $750  $793 
  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Operating lease cost

 $49  $65 

Short-term lease cost

  212   269 

Total lease costs

 $261  $334 
  

As of March 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Weighted average lease term (years)

  3.7   4.7 

Weighted average discount rate

  4.25%  4.25%
Lessee, Operating Lease, Liability, to be Paid, Maturity [Table Text Block]
  

March 31, 2024

 
  

(in thousands)

 

2024

 $160 

2025

  218 

2026

  224 

2027

  210 

Total lease payments

 $812 

Less: imputed interest

  (62)

Total lease liability

 $750 
v3.24.1.u1
Note 6 - Debt (Tables)
 3 Months Ended
Mar. 31, 2024
Notes Tables  
Schedule of Debt [Table Text Block]
  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Interest expense

 $111  $249 

Weighted average interest rate

  9.1%  8.5%
v3.24.1.u1
Note 7 - Commodity Derivatices (Tables)
 3 Months Ended
Mar. 31, 2024
Notes Tables  
Schedule of Derivative Instruments [Table Text Block]
  

Fixed Price Swaps

 
  

Quantity

  

Weighted

 
  

Crude oil

  

Average

 

Commodity/ Index/ Maturity Period

 

(Bbls)(1)

  

Price

 
         

NYMEX WTI

        

Crude Oil 2024 Contracts:

        

Second quarter 2024

  48,600  $81.76 

Third quarter 2024

  45,000  $79.80 

Fourth quarter 2024

  40,720  $78.15 

Total 2024

  134,320  $80.01 
Schedule of Derivative Liabilities at Fair Value [Table Text Block]
  

March 31, 2024

  

December 31, 2023

 
  

(in thousands)

 

Derivative assets:

        

Current assets

 $59  $1,844 

Total derivative assets

 $59  $1,844 
         
Derivative Instruments, Gain (Loss) [Table Text Block]
  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Commodity derivative settlement gain (loss):

        

Oil contracts

 $404  $(378)

Gas contracts

  -   (28)

Total commodity derivative settlement gain (loss)

 $404  $(406)
         

Total net commodity derivative gain (loss):

        

Oil contracts

 $(1,381) $859 

Gas contracts

  -   60 

Total net commodity derivative gain (loss)

 $(1,381) $919 
v3.24.1.u1
Note 9 - Shareholders' Equity (Tables)
 3 Months Ended
Mar. 31, 2024
Notes Tables  
Share-Based Payment Arrangement, Option, Activity [Table Text Block]
  

March 31, 2024

  

December 31, 2023

 
      Weighted      Weighted 
      Average      Average 
  Number of  Exercise  Number of  Exercise 
  

Shares

  

Price

  

Shares

  

Price

 
                 

Stock options outstanding and exercisable

  23,176  $38.92   23,176  $38.92 
Share-Based Payment Arrangement, Option, Exercise Price Range [Table Text Block]

Options Outstanding

  

Options Exercisable

 
   

Exercise

  

Weighted

  

Remaining

      

Weighted

 
   

Price

  

Average

  

Contractual

      

Average

 

Number of

  

Range

  

Exercise

  

Term

  

Number of

  

Exercise

 

Shares

  

Low

  

High

  

Price

  

(years)

  

Shares

  

Price

 
                          
16,500  $7.20  $11.60  $10.00   3.5   16,500  $10.00 
5,676   90.00   90.00   90.00   0.8   5,676   90.00 
1,000   226.20   226.20   226.20   0.4   1,000   226.20 
                          
23,176  $7.20  $226.20  $38.92   2.7   23,176  $38.92 
Schedule of Nonvested Restricted Stock Units Activity [Table Text Block]
      

Weighted-Avg.

 
      

Grant Date

 
      

Fair Value

 
  

Shares

  

Per Share

 
         

Non-vested restricted stock as of December 31, 2023

  855,236  $2.63 

Granted

  1,299,000  $0.96 

Vested

  (411,041) $2.78 

Forfeited

  (5,500) $2.30 

Non-vested restricted stock as of March 31, 2024

  1,737,695  $1.35 
v3.24.1.u1
Note 10 - Asset Retirement Obligations (Tables)
 3 Months Ended
Mar. 31, 2024
Notes Tables  
Schedule of Asset Retirement Obligations [Table Text Block]
  

March 31, 2024

  

December 31, 2023

 
  

(in thousands)

 

Balance, beginning of year

 $18,490  $15,442 

Acquired or incurred

  -   11 

Cost and life revisions

  (100)  2,494 

Plugged

  (58)  (215)

Sold

  -   (458)

Accretion

  393   1,216 

Balance, end of period

 $18,725  $18,490 
         

Asset retirement obligations - current

 $1,273  $1,273 

Asset retirement obligations - noncurrent

  17,452   17,217 

Balance, end of period

 $18,725  $18,490 
v3.24.1.u1
Note 12 - Income (Loss) Per Share (Tables)
 3 Months Ended
Mar. 31, 2024
Notes Tables  
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]
  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

(in thousands except per share data)

 

Net income (loss) attributable to common shareholders

 $(9,537) $(1,247)
         

Basic weighted average common shares outstanding

  25,388   25,179 

Dilutive effect of potentially dilutive securities

  -   - 

Diluted weighted average common shares outstanding

  25,388   25,179 
         

Basic net income (loss) per share

 $(0.38) $(0.05)

Diluted net income (loss) per share

 $(0.38) $(0.05)
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]
  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Stock options

  23   28 

Unvested shares of restricted stock

  1,738   1,210 

Total

  1,761   1,238 
v3.24.1.u1
Note 13 - Fair Value Measurements (Tables)
 3 Months Ended
Mar. 31, 2024
Notes Tables  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

As of March 31, 2024

                      

Net Fair Value

 
  

Quoted Prices

                  

Presented in the

 
  

in Active Markets

  

Significant Other

  

Significant

          

Unaudited

 
  

for Identical

  

Observable

  

Unobservable

          

Condensed

 
  

Assets

  

Inputs

  

Inputs

  

Total Gross

  

Effect of

  

Consolidated

 
  

(Level 1)

  

(Level 2)

  

(Level 3)

  

Fair Value

  

Netting

  

Balance Sheet

 

(in thousands)

 

Assets

                        

Current:

                        

Commodity derivatives

 $-  $101  $-  $101  $(42) $59 
                         

Liabilities

                        

Current:

                        

Commodity derivatives

 $-  $(42) $-  $(42) $42  $- 
                         

Net commodity derivative instruments

 $-  $59  $-  $59  $-  $59 

As of December 31, 2023

                      

Net Fair Value

 
  

Quoted Prices

                  

Presented in the

 
  

in Active Markets

  

Significant Other

  

Significant

          

Unaudited

 
  

for Identical

  

Observable

  

Unobservable

          

Condensed

 
  

Assets

  

Inputs

  

Inputs

  

Total Gross

  

Effect of

  

Consolidated

 
  

(Level 1)

  

(Level 2)

  

(Level 3)

  

Fair Value

  

Netting

  

Balance Sheet

 

(in thousands)

 

Assets

                        

Current:

                        

Commodity derivatives

 $-  $1,844  $-  $1,844  $-  $1,844 
                         

Net commodity derivative instruments

 $-  $1,844  $-  $1,844  $-  $1,844 
Fair Value, Assets Measured on Recurring Basis [Table Text Block]
  

March 31, 2024

  

December 31, 2023

 

Current assets:

        

Marketable equity securities

        

Number of shares owned

  2,421,180   2,421,180 

Quoted market price

 $0.07382  $0.06789 
         

Fair value of marketable equity securities

 $178,732  $164,375 
v3.24.1.u1
Note 14 - Other Current Assets and Accounts Payable and Accrued Liabilities (Tables)
 3 Months Ended
Mar. 31, 2024
Notes Tables  
Schedule of Other Current Assets [Table Text Block]
  

March 31, 2024

  

December 31, 2023

 
  

(in thousands)

 

Prepaid expenses

 $598  $88 

Joint interest billings receivable

  248   265 

Income tax receivable

  45   135 

Other

  38   39 
         

Total other current assets

 $929  $527 
Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]
  

March 31, 2024

  

December 31, 2023

 
  

(in thousands)

 

Accounts payable

 $2,138  $1,944 

Operating expense and oil and gas property accruals

  832   1,335 

Interest Payable

  112   247 

Production taxes payable

  595   454 

Insurance premium financing

  -   62 

Other

  18   22 
         

Total accounts payable and accrued expenses

 $3,695  $4,064 
v3.24.1.u1
Note 15 - Supplemental Disclosures of Cash Flow Information (Tables)
 3 Months Ended
Mar. 31, 2024
Notes Tables  
Schedule of Cash Flow, Supplemental Disclosures [Table Text Block]
  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

(in thousands)

 

Cash paid for interest

 $254  $268 

Cash received for income taxes

  (70)  - 
         

Investing activities:

        

Change in capital expenditure accruals

  -   18 

Asset retirement obligations

  (158)  43 

Financing activities:

        

Accrual for repurchase of common stock

  (59)   

Financing of insurance premiums with note payable

  -   654 
v3.24.1.u1
Note 2 - Acquisitions and Divestitures (Details Textual)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
USD ($)
Asset Retirement Obligations, Relief Through Disposals $ 500
Wells and Overriding Royalty Interests in North Dakota, New Mexico, and Texas [Member]  
Proceeds from Sale of Oil and Gas Property and Equipment 7,000
Disposal Group,Transaction Costs $ 400
Number of Wells Sold 152
Number of Overriding Royalty Interests Sold 7
Gain (Loss) on Disposition of Oil and Gas Property $ 0
v3.24.1.u1
Note 3 - Revenue From Contracts With Customers - Disaggregation of Revenue (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Revenue $ 5,391 $ 8,272
Oil Sales[Member]    
Revenue 4,727 7,095
Natural Gas, Midstream [Member]    
Revenue 664 1,177
Rockies [Member]    
Revenue 1,762 2,426
Rockies [Member] | Oil Sales[Member]    
Revenue 1,721 2,338
Rockies [Member] | Natural Gas, Midstream [Member]    
Revenue 41 88
West Texas, South Texas, and Gulf Coast [Member]    
Revenue 1,645 3,164
West Texas, South Texas, and Gulf Coast [Member] | Oil Sales[Member]    
Revenue 1,599 2,955
West Texas, South Texas, and Gulf Coast [Member] | Natural Gas, Midstream [Member]    
Revenue 46 209
Mid-Continent [Member]    
Revenue 1,984 2,682
Mid-Continent [Member] | Oil Sales[Member]    
Revenue 1,407 1,802
Mid-Continent [Member] | Natural Gas, Midstream [Member]    
Revenue $ 577 $ 880
v3.24.1.u1
Note 3 - Revenue Recognition - Schedule of Concentration Risk (Details) - Revenue Benchmark [Member] - Customer Concentration Risk [Member]
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Purchaser A [Member]    
Concentration risk percentage 28.00% 11.00%
Purchaser B [Member]    
Concentration risk percentage 23.00% 18.00%
Purchaser C [Member]    
Concentration risk percentage 11.00% 0.00%
Purchaser D [Member]    
Concentration risk percentage 0.00% 15.00%
Purchaser E [Member]    
Concentration risk percentage 0.00% 13.00%
v3.24.1.u1
Note 4 - Leases - Lease Cost (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Dec. 31, 2023
Right-of-use asset $ 653   $ 693
Current lease obligation 186   182
Long-term lease obligation 564   611
Operating Lease, Liability 750   $ 793
Operating lease cost 49 $ 65  
Short-term lease cost 212 269  
Total lease costs $ 261 $ 334  
Weighted average lease term (years) (Year) 3 years 8 months 12 days 4 years 8 months 12 days  
Weighted average discount rate 4.25% 4.25%  
v3.24.1.u1
Note 4 - Leases - Schedule of Operating Lease Maturity (Details) - USD ($)
$ in Thousands
Mar. 31, 2024
Dec. 31, 2023
2024 $ 160  
2025 218  
2026 224  
2027 210  
Total lease payments 812  
Less: imputed interest (62)  
Total lease liability $ 750 $ 793
v3.24.1.u1
Note 5 - Oil and Natural Gas Production Activities (Details Textual)
$ in Thousands
 3 Months Ended 12 Months Ended
Mar. 31, 2024
USD ($)
$ / item
Mar. 31, 2023
USD ($)
Dec. 31, 2023
Oil and Gas Property, Ceiling Test, Discount Rate     10.00%
Impairment, Oil and Gas, Property with Unproved and Proved Reserves | $ $ 5,419 $ 0  
Crude Oil [Member]      
Oil and Gas, Average Sale Price Per Unit (in USD per Per Share) 77.48    
Natural Gas and Natural Gas Liquids (NGL) [Member]      
Oil and Gas, Average Sale Price Per Unit (in USD per Per Share) 2.45    
v3.24.1.u1
Note 6 - Debt (Details Textual)
$ in Millions
Jan. 05, 2022
USD ($)
Mar. 31, 2024
USD ($)
Jul. 26, 2022
USD ($)
Debt Instrument, Variable Interest Rate, Type [Extensible Enumeration] Fed Funds Effective Rate Overnight Index Swap Rate [Member]    
Credit Agreement [Member]      
Debt Instrument, Face Amount $ 15 $ 20 $ 20
Line of Credit Facility, Maximum Borrowing Capacity $ 100    
Debt Instrument, Basis Spread on Variable Rate 0.50%    
Debt Instrument, Covenant, Ratio of Total Debt to EBITDAX 3    
Debt Instrument, Covenant, Ratio of Consolidated Current Assets to Consolidated Current Liabilities 1    
Long-Term Debt, Gross   $ 5  
Credit Agreement [Member] | Minimum [Member]      
Debt Instrument, Applicable Margin on Basis Spread 0.25%    
Debt Instrument, Covenant, Restricted Payment, Percentage of Existing Borrowing Base 20.00%    
Credit Agreement [Member] | Maximum [Member]      
Debt Instrument, Applicable Margin on Basis Spread 1.25%    
v3.24.1.u1
Note 6 - Debt - Schedule of Debt (Details) - Credit Agreement [Member] - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Interest expense $ 111 $ 249
Weighted average interest rate 9.10% 8.50%
v3.24.1.u1
Note 7 - Commodity Derivatives - Schedule of Contracts Outstanding (Details)
 3 Months Ended
Mar. 31, 2024
$ / bbl
bbl
Second Quarter Crude Oil 2023 Contracts Collars [Member]  
Quantity of crude oil (Barrel of Oil) | bbl 48,600 [1]
Weighted average price floor (in USD per Barrel of Oil) | $ / bbl 81.76
Third Quarter Crude Oil 2023 Contracts Collars [Member]  
Quantity of crude oil (Barrel of Oil) | bbl 45,000 [1]
Weighted average price floor (in USD per Barrel of Oil) | $ / bbl 79.8
Fourth Quarter 2023 Crude Oil Contracts [Member]  
Quantity of crude oil (Barrel of Oil) | bbl 40,720 [1]
Weighted average price floor (in USD per Barrel of Oil) | $ / bbl 78.15
Crude Oil 2023 Contracts [Member]  
Quantity of crude oil (Barrel of Oil) | bbl 134,320 [1]
Weighted average price floor (in USD per Barrel of Oil) | $ / bbl 80.01
[1] “Bbl” refers to one stock tank barrel, or 42 U.S. gallons liquid volume, used in this report in reference to crude oil or other liquid hydrocarbons.
v3.24.1.u1
Note 7 - Commodity Derivatives - Schedule of Derivative Assets and Liabilties (Details) - USD ($)
$ in Thousands
Mar. 31, 2024
Dec. 31, 2023
Current assets $ 59 $ 1,844
Total derivative assets $ 59 $ 1,844
v3.24.1.u1
Note 7 - Commodity Derivatives - Schedule of Derivative Gains and Losses (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Total derivative settlement gains (losses) $ 404 $ (406)
Total net commodity derivative gains (losses) (1,381) 919
Oil Contracts [Member]    
Total derivative settlement gains (losses) 404 (378)
Total net commodity derivative gains (losses) (1,381) 859
Gas Contracts [Member]    
Total derivative settlement gains (losses) 0 (28)
Total net commodity derivative gains (losses) $ 0 $ 60
v3.24.1.u1
Note 9 - Shareholders' Equity (Details Textual) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended
Feb. 23, 2023
Mar. 31, 2024
Mar. 31, 2023
Dec. 31, 2023
Apr. 26, 2023
Common Stock, Shares, Outstanding (in shares)   25,343,013   25,333,870  
Common Stock, Shares Authorized (in shares)   245,000,000   245,000,000  
Preferred Stock, Shares Authorized (in shares)   5,000,000      
Share-Based Compensation Arrangement by Share-Based Payment Award, Expiration Period (Year)   10 years      
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross (in shares)   0 0    
Common Stock, Dividends, Per Share, Cash Paid (in dollars per share) $ 0.0225        
Dividends and Interest Paid   $ 600 $ 0    
Stock Repurchase Program, Authorized Amount         $ 5,000
Stock Repurchased During Period, Shares (in shares)   318,200 0    
Stock Repurchased During Period, Value   $ 337      
Shares Acquired, Average Cost Per Share (in dollars per share)   $ 1.06      
Share-Based Payment Arrangement, Option [Member]          
Share-Based Payment Arrangement, Expense   $ 0 $ 0    
Restricted Stock [Member]          
Share-Based Payment Arrangement, Expense   200 $ 700    
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount   $ 1,600      
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)   1 year 7 months 6 days      
Restricted Stock [Member] | Minimum [Member]          
Share Price (in dollars per share)   $ 2      
v3.24.1.u1
Note 9 - Shareholders' Equity - Stock Option Activity (Details) - $ / shares
Mar. 31, 2024
Dec. 31, 2023
Stock options outstanding and exercisable (in shares) 23,176 23,176
Stock options outstanding and exercisable, exercise price (in dollars per share) $ 38.92 [1] $ 38.92
[1] Represents the weighted average price.
v3.24.1.u1
Note 9 - Shareholders' Equity - Schedule of Stock Option by Exercise Price (Details)
 3 Months Ended
Mar. 31, 2024
$ / shares
shares
Options outstanding, number of shares (in shares) | shares 23,176
Options outstanding, lower exercise price range (in dollars per share) $ 7.2
Options outstanding, upper exercise price range (in dollars per share) 226.2
Options outstanding, weighted average exercise price (in dollars per share) $ 38.92
Options outstanding, remaining contractual term (Year) 2 years 8 months 12 days
Options exercisable, number of shares (in shares) | shares 23,176
Options exercisable, weighted average exercise price (in dollars per share) $ 38.92
Exercise Price Range 1 [Member]  
Options outstanding, number of shares (in shares) | shares 16,500
Options outstanding, lower exercise price range (in dollars per share) $ 7.2
Options outstanding, upper exercise price range (in dollars per share) 11.6
Options outstanding, weighted average exercise price (in dollars per share) $ 10
Options outstanding, remaining contractual term (Year) 3 years 6 months
Options exercisable, number of shares (in shares) | shares 16,500
Options exercisable, weighted average exercise price (in dollars per share) $ 10
Exercise Price Range 2 [Member]  
Options outstanding, number of shares (in shares) | shares 5,676
Options outstanding, lower exercise price range (in dollars per share) $ 90
Options outstanding, upper exercise price range (in dollars per share) 90
Options outstanding, weighted average exercise price (in dollars per share) $ 90
Options outstanding, remaining contractual term (Year) 9 months 18 days
Options exercisable, number of shares (in shares) | shares 5,676
Options exercisable, weighted average exercise price (in dollars per share) $ 90
Exercise Price Range 3 [Member]  
Options outstanding, number of shares (in shares) | shares 1,000
Options outstanding, lower exercise price range (in dollars per share) $ 226.2
Options outstanding, upper exercise price range (in dollars per share) 226.2
Options outstanding, weighted average exercise price (in dollars per share) $ 226.2
Options outstanding, remaining contractual term (Year) 4 months 24 days
Options exercisable, number of shares (in shares) | shares 1,000
Options exercisable, weighted average exercise price (in dollars per share) $ 226.2
v3.24.1.u1
Note 9 - Shareholders' Equity - Restricted Stock Activity (Details) - Restricted Stock [Member]
 3 Months Ended
Mar. 31, 2024
$ / shares
shares
Non-vested restricted stock (in shares) | shares 855,236
Non-vested restricted stock, weighted average grant date fair value (in dollars per share) | $ / shares $ 2.63
Granted (in shares) | shares 1,299,000
Granted, weighted average grant date fair value (in dollars per share) | $ / shares $ 0.96
Vested (in shares) | shares (411,041)
Vested, weighted average grant date fair value (in dollars per share) | $ / shares $ 2.78
Forfeited (in shares) | shares (5,500)
Forfeited (in dollars per share) | $ / shares $ 2.3
Non-vested restricted stock (in shares) | shares 1,737,695
Non-vested restricted stock, weighted average grant date fair value (in dollars per share) | $ / shares $ 1.35
v3.24.1.u1
Note 10 - Asset Retirement Obligation - Schedule of Asset Retirement Obligations (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Dec. 31, 2023
Balance, beginning of year $ 18,490 $ 15,442  
Acquired or incurred 0 11  
Cost and life revisions (100) 2,494  
Plugged (58) (215)  
Sold 0 (458)  
Accretion 393 1,216  
Balance, end of period 18,725 18,490  
Asset retirement obligations - current 1,273 1,273 $ 1,273
Asset retirement obligations - noncurrent $ 17,452 $ 17,217 $ 17,217
v3.24.1.u1
Note 11 - Income Taxes (Details Textual)
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Effective Income Tax Rate Reconciliation, Percent 0.00% 5.00%
v3.24.1.u1
Note 12 - Income (Loss) Per Share - Schedule of Loss Per Share (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Net income (loss) attributable to common shareholders $ (9,537) $ (1,247)
Basic weighted average common shares outstanding (in shares) 25,388 25,179
Dilutive effect of potentially dilutive securities (in shares) 0 0
Diluted weighted average common shares outstanding (in shares) 25,388 25,179
Basic net income (loss) per share (in dollars per share) $ (0.38) $ (0.05)
Basic and diluted income (loss) per share (in dollars per share) $ (0.38) $ (0.05)
v3.24.1.u1
Note 12 - Income (Loss) Per Share - Schedule of Antidilutive Securities (Details) - shares
shares in Thousands
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Antidilutive securities (in shares) 1,761 1,238
Share-Based Payment Arrangement, Option [Member]    
Antidilutive securities (in shares) 23 28
Restricted Stock [Member]    
Antidilutive securities (in shares) 1,738 1,210
v3.24.1.u1
Note 13 - Fair Value Measurements (Details Textual)
Mar. 31, 2024
Minimum [Member]  
Derivative, Fixed Interest Rate 7.30%
Maximum [Member]  
Derivative, Fixed Interest Rate 19.00%
v3.24.1.u1
Note 13 - Fair Value Measurements - Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis (Details) - USD ($)
$ in Thousands
Mar. 31, 2024
Dec. 31, 2023
Commodity derivative asset -current $ 59 $ 1,844
Commodity derivatives, current 59 1,844
Fair Value, Recurring [Member]    
Commodity derivatives, current 101 1,844
Commodity derivatives, current (42) 0
Commodity derivative asset -current 59 1,844
Commodity derivatives, noncurrent (42)  
Commodity derivatives, noncurrent 42  
Commodity derivatives, noncurrent 0  
Net commodity derivative instruments 59 1,844
Net commodity derivative instruments 59 1,844
Commodity derivatives, current 42 0
Commodity derivatives, current 59 1,844
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]    
Commodity derivatives, current 0 0
Commodity derivatives, noncurrent 0  
Net commodity derivative instruments 0 0
Net commodity derivative instruments 0 0
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]    
Commodity derivatives, current 101 1,844
Commodity derivatives, noncurrent (42)  
Net commodity derivative instruments 59 1,844
Net commodity derivative instruments 59 1,844
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]    
Commodity derivatives, current 0 0
Commodity derivatives, noncurrent 0  
Net commodity derivative instruments 0 0
Net commodity derivative instruments $ 0 $ 0
v3.24.1.u1
Note 13 - Fair Value Measurements - Schedule of Fair Value Assets Measured on Recurring Basis (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Number of shares owned (in shares) 2,421,180 2,421,180
Quoted market price (in dollars per share) $ 0.07382 $ 0.06789
Fair value $ 178,732 $ 164,375
v3.24.1.u1
Note 14 - Other Current Assets and Accounts Payable and Accrued Liabilities - Schedule of Other Current Assets (Details) - USD ($)
$ in Thousands
Mar. 31, 2024
Dec. 31, 2023
Prepaid expenses $ 598 $ 88
Joint interest billings receivable 248 265
Income tax receivable 45 135
Other 38 39
Total other current assets $ 929 $ 527
v3.24.1.u1
Note 14 - Other Current Assets and Accounts Payable and Accrued Liabilities - Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($)
$ in Thousands
Mar. 31, 2024
Dec. 31, 2023
Accounts payable $ 2,138 $ 1,944
Operating expense and oil and gas property accruals 832 1,335
Interest Payable 112 247
Production taxes payable 595 454
Insurance premium financing 0 62
Other 18 22
Total accounts payable and accrued expenses $ 3,695 $ 4,064
v3.24.1.u1
Note 15 - Supplemental Disclosures of Cash Flow Information - Supplemental Disclosures of Cash Flow Information (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Cash paid for interest $ 254 $ 268
Cash received for income taxes (70) 0
Change in capital expenditure accruals 0 18
Asset retirement obligations (158) 43
Accrual for repurchase of common stock (59)
Financing of insurance premiums with note payable $ 0 $ 654
v3.24.1.u1
Note 16 - Subsequent Events (Details Textual) - Subsequent Event [Member] - Crude Oil Swaps [Member]
Apr. 02, 2024
$ / bbl
bbl
Derivative, Nonmonetary Notional Amount, Volume (Barrel of Oil) | bbl 164,125
Derivative, Floor Price (in USD per Barrel of Oil) | $ / bbl 73.71
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